Tokyo stocks seen falling on Wall St, eyes on Nikko

TOKYO, Mar 14 (Reuters) Tokyo stocks are seen moving lower on Wednesday, with a wide range of shares including exporters such as Sony Corp. falling on concerns about the US economic outlook and a stronger yen after U.S. stocks sank on Tuesday in their second-worst sell-off of the year.

Another market focus is Nikko Cordial Corp. Citigroup raised its offer for Nikko by 26 percent to .4 billion on Tuesday after a decision by the Tokyo Stock Exchange not to revoke the brokerage's listing sharply boosted its value.

The U.S. market plunge is likely to have the same impact on the Japanese market as seen after the global market sell-off on Feb. 27, said Norihiro Fujito, general manager of the investment research and information division at Mitsubishi UFJ Securities.

''Investors will most likely unwind the yen carry trade on concerns about the slowdown of the U.S. economy, which will strengthen the yen,'' he said. ''Investors will likely sell stocks and buy bonds.'' The carry trade is a strategy where investors finance purchases of assets by borrowing a low yield currency such as the yen.

Tokyo's last slide in February came after the Dow Jones industrial average suffered its worst fall since the aftermath of the Sept. 11 attacks, triggered by a sell-off in China's stock market and a bigger-than-expected drop in orders for U.S.-made durable goods.

In New York, the dollar was down 1.2 percent against the yen at 116.25 yen in late trading. The yen's gains coincided with falls in the U.S. stock market.

A stronger yen weighs on exporters as it cuts the value of overseas sales when translated back into the Japanese currency.

Nikkei futures contracts expiring in June finished at 16,790 in Chicago, down 340 points from the close in Osaka.

The Nikkei is likely to move between 16,700 and 16,900 on Wednesday, Fujito said.

The benchmark snapped a three-day winning streak on Tuesday, sliding 0.66 percent to finish at 17,178.84.

Citigroup's move came a day after the TSE's surprise ruling weakened the U.S. bank's leverage against a group of large North American shareholders who had dismissed its initial offer as too low.

U.S. stocks plunged on Tuesday as the impact of losses in the subprime mortgage group cascaded across the financial sector, and an unexpected drop in February retail sales, excluding automobiles, added to concerns.

The Dow Jones industrial average dropped 1.97 percent.

STOCKS TO WATCH -- Mitsubishi Heavy Industries Ltd.

Mitsubishi Heavy is set to receive a .2 billion order to build two nuclear reactors for U.S. power plant operator TXU Corp., the Nikkei business daily reported on Wednesday.

-- NEC Electronics Corp.

The electronics maker's Chinese unit expects to expand its sales by more than 30 percent annually over the next few years, due to strong demand for microchips and audio-visual products, a senior executive told Reuters on Tuesday.

-- Denso Corp.

The auto parts maker said it would buy back 2.5 million of its shares at 4,450 yen each before the start of trade on the Nagoya exchange on Wednesday.

-- Fujiya Co. Ltd.

The confectioner said it would book a group recurring loss of 7.2 billion yen for the full year to March, instead of its earlier forecast of a 1.00 billion yen profit, after a scandal led it to halt production of some products and close many of its stores. The company admitted to shipping products made with stale ingredients.

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