Nikkei seen falling after US rate fears revive

Tokyo, Apr 10: Tokyo stocks are seen falling on Monday, with profit-taking hitting recent gainers including bank shares, after strong U.S. jobs data revived concerns about higher interest rates and dampened U.S. bond and stock markets.

February machinery orders data, a gauge of capital spending, is due at 0500 GMT. An expected rise in core machinery orders could inspire buying late in the session, analysts said.

''A fall in U.S. stocks will likely pour cold water on Japanese shares,'' said Masayoshi Okamoto, head of dealing at Jujiya Securities.

''But I don't think there will be a heavy sell-off as trading volume is unlikely to increase. The consensus is that the market will stay around the current high levels for a while,'' he said.

Traders expect the Nikkei to move between 17,350 and 17,500 on Monday.

On Friday it rose 0.42 percent to close above 17,500 for the first time since July 2000 as technology stocks rose on earnings hopes and metal stocks gained on high commodity prices.

In Chicago, Nikkei futures expiring in June closed at 17,420, a fall of 140 points from the Osaka finish.

A poll of economists produced a median forecast of a 3.3 percent rise in core machinery orders from a month earlier.

U.S. stocks fell on Friday as investors fretted that a stronger-than-expected March job growth report will give the Federal Reserve more ammunition to push interest rates higher.

The yield on the benchmark U.S. 10-year Treasury note jumped to 4.99 percent, its highest since June 2002, on perceptions the Fed would raise rates more than had been previously expected.

With yields at that level, bonds can pose more competition to stocks.

However, any fall in Japanese stocks could be limited, analysts said.

Behind recent gains in Japanese shares lies strong demand by foreign investors amid optimism that Japanese firms would post a fifth straight year of profit expansion in the year that started on April 1.

At the same time, Japanese institutional investors are seen eager to buy on dips to boost the returns of their portfolios, another factor that could limit any falls.

The Tokyo Stock Exchange has shortened overall afternoon trading by 30 minutes to avoid computer system problems. Trade will begin at 1 p.m. (0400 GMT) instead of the usual 12:30 p.m.

and will finish at 3 p.m.

STOCKS TO WATCH -- INPEX Corp.

IPEX plans to invest about 700 billion yen ( billion) to produce liquefied natural gas (LNG) in Australia, the Nihon Keizai business daily reported on Sunday.

-- Daiwa Securities Group Inc.

Japan's second-biggest brokerage, said on Friday it expects annual operating profit to grow by two-thirds over the next three years to at least 350 billion yen.

REUTERS