Tokyo stocks seen lower as US shares slip, CPI eyed

TOKYO, May 25 (Reuters) Tokyo stocks are seen opening lower on Friday after a retreat in U.S. stocks, while traders will also be watching Japanese consumer price data due before the start of trade for clues on the economic outlook and interest rates.

Auto exporters such as Honda Motor Co. Ltd. may gain following solid U.S. economic data, said Kazuhiro Takahashi, a general manager in the equity marketing department at Daiwa Securities SMBC.

''But the main focus in the market is the CPI data,'' he said.

The core consumer price index (CPI), which excludes volatile fresh food prices, is regarded as a key indicator that the Bank of Japan watches in guiding monetary policy.

A Reuters poll found the market forecast is for a 0.1 percent fall in nationwide CPI in April from a year earlier, compared with a 0.3 decline in March, which could make it harder for the BOJ to consider hiking rates anytime soon.

Higher rates are seen as hurting stocks as they increase borrowing costs and can curb consumer spending, but they boost the income of banks.

''But either way, falls in the Japanese market are likely to be limited as U.S. stocks declined mostly on profit-taking after a rally, and it's also the weekend,'' he said.

News that sales of new homes in the United States climbed at their fastest pace in 14 years signaled a slowdown in housing may have bottomed out, but it also reduced expectations for a Federal Reserve cut in official rates.

Nikkei futures pointed to a fall in stock prices. Contracts expiring in June closed at 17,540 in Chicago on Thursday, down 120 points from the close in Osaka The Nikkei is likely to move between 17,550 and 17,750 on Friday, market participants said.

The benchmark ended down 0.05 percent on Thursday at 17,696.97.

U.S. stocks fell on Thursday with the Dow Jones industrial average falling 0.62 percent to end at 13,441.13.

STOCKS TO WATCH -- Fujitsu Ltd.

Fujitsu said on Thursday it will buy back up to 28 billion yen of its own shares from May 25 to July 31 and use the shares in a swap to fully consolidate three subsidiaries -- Fujitsu Access Ltd., Fujitsu Devices Ltd. and unlisted Fujitsu Wireless Systems Ltd.

-- Matsushita Electric Industrial Co. Ltd., Hitachi Ltd.

Panasonic maker Matsushita Electric Industrial and Hitachi said on Thursday they would mutually supply large-sized plasma display panels.

-- Aozora Bank Ltd., Bank of Yokohama Ltd. T> Aozora said on Thursday it signed an alliance with the Bank of Yokohama, part of its strategy of developing long-standing relationships with the country's regional banks.

-- Fukuoka Financial Group, Kyushu-Shinwa Holdings Inc. T> Fukuoka Financial said it would buy Kyushu-Shinwa's core bank and card units for up to 76 billion yen (5 million) in a deal to create Japan's largest regional bank.

REUTERS DKS PM0517