Tokyo stocks seen moving lower, Daiei a focus

TOKYO, March 8 (Reuters) Tokyo stocks are seen moving lower on Thursday, hit by continuing concerns about the outlook for the key U.S. market and a stronger yen.

Trade is also likely to be volatile ahead of Friday's settlement of March Nikkei futures and options contracts.

Shares of Daiei Inc. may be a focus.

Retailer Aeon Co. has finalised a deal to take a 15 percent stake in the supermarket chain, a move that will create the country's biggest retail group, the Nikkei business daily reported on Thursday.

''The outlook for the U.S. economy remains a concern,'' said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

The U.S. is a key market for Japan's exporters.

''We are also likely to see market volatility due to the settlement of derivatives,'' Nishi said.

Nikkei futures pointed to a fall in the market. Contracts expiring in March finished at 16,735 in Chicago, down 25 points from the close in Osaka The yen rose against the dollar on Wednesday. A stronger yen is bad for Japan's exporters as it eats into profits when earnings from abroad are brought home.

The Nikkei is likely to move between 16,650 and 16,850 on Thursday, market sources said.

The benchmark fell 0.47 percent to 16,764.62 on Wednesday.

U.S. stocks fell on Wednesday with the Dow Jones industrial average losing 0.12 percent and the Nasdaq Composite Index declining 0.44 percent.

STOCKS TO WATCH -- Aeon, Daiei Aeon has finalised a deal to take a 15 percent stake in supermarket chain Daiei, a move that will create Japan's biggest retail group, the Nikkei business daily reported on Thursday.

The deal, to be announced by the two companies on Friday, will include Aeon's purchase of a 20 percent holding in Daiei's grocery store subsidiary Maruetsu Inc., the paper said.

Aeon had said in October it was in talks to buy the stakes in Daiei and Maruetsu.

-- Toyobo Co. Ltd. T> The spinning company said on Wednesday it would issue 20 billion yen (1.8 million) worth of euroyen convertible bonds that mature in 2012. It plans to use most of the funds for investments.

-- Tokyo Electron Ltd. T> The chip equipment maker will spend 20-30 billion yen to build a new factory in Japan to make equipment for next-generation chips, the Nikkei said on Thursday. The factory will come on-line in 2010 and have a work force of up to 1,000, the paper said.

-- Komatsu Ltd. T> The construction machinery maker will likely see its group net profit rise 3 percent to about 150 billion yen in the business year to March 2008, marking its fourth straight year of record profit, the Nikkei said on Thursday.

Komatsu's sales will likely rise 8 percent to 2 trillion yen in 2007/08, helped by strong demand for hydraulic shovels and other construction and mining equipment in Central and South America, Europe and Asia, the paper said.

(=116.42 Yen) REUTERS SRS VP0510