Nikkei seen tracking Wall St, test year's high

TOKYO, July 3 (Reuters) Japan's Nikkei average is expected to rise on Tuesday and could clear its 2007 high following a rally on Wall Street, though the yen's rise against the dollar could limit buying of exporters and keep gains in check.

Kawasaki Heavy Industries Ltd. could lure buyers after the Nikkei business daily reported it plans to build an aircraft for commercial air freight carriers by 2012, using its expertise from developing a military plane.

Analysts predicted the Nikkei average would move between 18,100 and 18,300 on Tuesday after finishing the previous session up 0.04 percent at 18,146.30. It could flirt with a 2007 intraday high of 18,300.39 hit on Feb. 26.

''We should see a broad rise today,'' said Norihiro Fujito, general manager of Mitsubishi UFJ Securities' investment research and information division. ''The Nikkei might even clear 18,300, though there will need to be heavy volume for that.'' Nikkei futures point to a higher opening. Contracts traded in Chicago finished the previous session at 18,270, up 80 points from the close in Osaka On Wall Street on Monday, the Standard&Poor's 500 Index climbed 1.07 percent after a surprising rise in the Institute for Supply Management's (ISM) factory index to its highest level in more than a year.

''The ISM was good, and that raises expectations for the U.S.

economy,'' said an analyst at a Japanese asset management company.

But the analyst said some investors could refyen (6 million) for the January-June first half, down 33 percent from a year earlier but 5 billion yen better than its forecast due to inventory valuation gains, the Nikkei business daily said on Tuesday.

-- Nippon Telegraph and Telephone Corp (NTT) T> Japan's largest fixed-line operator plans to boost revenues at its non-telecoms businesses by 40 percent to more than 1 trillion yen a year, the Nikkei business daily quoted NTT President Satoshi Miura as saying in an interview published on Tuesday.

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