Tokyo stocks seen opening lower, eyes on Fed, BOJ

TOKYO, Mar 19 (Reuters) The Nikkei average is seen opening lower on Monday with shares in exporters such as Canon Inc. falling on a stronger yen and as investors become cautious ahead of a Federal Reserve meeting to get a hint on the U.S. economic outlook.

The Bank of Japan starts its two-day policy meeting on Monday, but the market may pay more attention to the Fed meeting, said Kazuhiro Takahashi, general manager of the equity marketing department at Daiwa Securities SMBC.

''Gains in Japanese stocks may be limited on a stronger yen and the main focus of investors is on the result of the Fed's meeting,'' he said.

''If the Fed said the U.S. economy has slowed, that would be a minus to U.S. stocks and Japanese stocks could go further down.'' The Fed, which meets for two days, will announce its decision on Wednesday.

Takahashi said Japan's central bank is unlikely to change its financial policy for at least another six months after raising interest rates last month.

In New York, the dollar was down 0.6 percent at 116.79 yen on Friday. The yen was trading at 116.26 yen against the dollar in early Asian trade.

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

Nikkei futures contracts expiring in June finished at 16,730 in Chicago, up 30 points from the close in Osaka pointing to a slight rise in the Nikkei average.

The Nikkei is likely to move between 16,600 and 16,800 on Monday, Takahashi said.

The benchmark lost 0.69 percent on Friday to finish at 16,744.15.

On the week the Nikkei lost 2.4 percent.

U.S. stocks fell on Friday as data showing strong consumer price inflation dented hopes for an interest rate cut any time soon, while fears about the subprime mortgage crisis kept investors on edge.

The Dow Jones industrial average fell 0.41 percent to end at 12,110.41.

STOCKS TO WATCH -- Topcon Corp., Sokkia Co.

Topcon, the world's third-biggest maker of surveying instruments, said on Friday it plans to buy shares in its closest local rival Sokkia to help compete against global players.

-- Terumo Corp.

The medical device maker is expected to beat its own earnings forecasts for the current business year, due to robust demand for its catheters, the Nikkei business daily said on Saturday.

--Toyama Chemical Co. Ltd.

The drug maker said on Friday it expects to book a large annual loss, as licensing talks for drugs in development would be not be wrapped up until next business year.

-- Honda Motor Co.

Honda will recall 528,406 locally made cars in China next week due to potential problems with oil pipes and pumps, its venture in southern China said on Friday.

-- Hitachi Ltd.

Hitachi said on Friday its hard disk drive unit is likely to report a bigger operating loss in the first three months of 2007 than the 5.4 billion yen loss it posted for the same period a year earlier.

REUTERS SBA PM0505