Tokyo stocks seen higher but gains may be capped

TOKYO, May 28 (Reuters) Tokyo stocks are seen likely to gain on Monday led by exporters such as Toyota Motor Corp. after a rise in U.S. markets and due to a weaker yen.

But broad gains may be limited, due in part to concern about the outlook for Prime Minister Shinzo Abe's government after a poll by the Nikkei business daily showed the approval rating for Abe's cabinet has fallen to 41 percent.

''Stocks here are likely to see a rebound, after the gain in U.S.

markets and as the yen remains in the region of 121 yen to the dollar,'' said Yutaka Miura, a senior technical strategist at Shinko Securities.

The yen was at 121.75 yen to the dollar in early Asian trading, having marked its fifth straight week of declines against the dollar last week.

A weaker yen is a positive for exporters such as Toyota as it boosts profits when earnings from abroad are brought home.

But concern about the future of Abe's pro-market government could make investors more cautious, Shinko's Miura said.

''A decline in the approval rating could curb gains.'' Nikkei futures pointed to a rise in stock prices. Contracts expiring in June closed at 17,545 in Chicago on Friday, up 95 points from the close in Osaka The Nikkei is likely to move between 17,400 and 17,700 on Monday, market participants said.

The benchmark ended down 1.22 percent on Friday at 17,481.21.

U.S. stocks ended higher on Friday, with the Dow Jones industrial average rising 0.49 percent to 13,507.28. The Nasdaq Composite Index advanced 0.76 percent to 2,557.19.

STOCKS TO WATCH -- All Nippon Airways Co. Ltd. T> Computer problems forced Japan's second-largest airline to cancel all its domestic flights out of Tokyo's Haneda airport for about four hours on Sunday.

-- Fujitsu Ltd.

Fujitsu Ltd. said on Friday it is pushing ahead with a 0 million hostile bid for GFI Informatique, a day after the French computer services company called Fujitsu's offer too low.

-- Toshiba Corp., Canon Inc. T> Toshiba and Canon have decided to postpone the launch of SED TVs for a second time, the Japanese companies said on Friday, raising doubt over the commercial viability of the new flat televisions.

-- Resona Holdings Inc.

Resona is considering a tie-up to bolster its investment banking business as it looks to capitalise on increased consolidation among smaller companies, the chairman of Japan's fourth-largest bank told Reuters on Friday.

-- kabu.com Securities Co. T> The online brokerage's chief executive told Reuters on Friday he expects a wave of aggressive discounting in two years time when stock certificates go digital, making it easier for investors to trade more actively.

-- TOC Co., KK DaVinci Advisors OJ> Building leasing firm TOC said on Friday it is opposed to a tender offer from real estate investment firm KK DaVinci Advisors, setting the stage for a rare hostile takeover battle in Japan.

-- Fujitec Co. Ltd. T> U.S. activist fund Dalton Investments LLC is stepping up pressure on elevator maker Fujitec Co. to dispose of its U.S. and European operations and invest further in China.

-- Honda Motor Co.

The automaker plans to raise its local procurement rate for car parts and components in China to 90 percent from the current 70 percent by the end of 2008, the Nikkei business daily said on Sunday.

-- Hitachi Ltd. T> Hewlett-Packard Co. said on Friday it has hired David Robertson from rival Hitachi Data Systems Corp. to head HP's data storage business. Robertson had been chief executive of Hitachi Data Systems, Hitachi's data storage unit.

REUTERS CS SBA PM0522