Nikkei seen recovering ground but gains limited

TOKYO, July 19 (Reuters) Japanese stocks are seen moving slightly higher on Thursday with recent decliners such as Canon Inc. recovering ground after an overnight fall in U.S. stocks was less steep than some had expected.

Toyota Motor Corp. and other auto stocks are another focus in the market with news that Monday's earthquake in northwest Japan could stall their domestic production, said Tsuyoshi Segawa, an equity strategist at Shinko Securities.

At least four Japanese automakers including Toyota said on Wednesday they would suspend production after the earthquake hit the factories of a major parts supplier.

''The market here will likely rebound a bit at the opening because New York stocks didn't extend losses much after Japanese stocks lost ground in the previous session, expecting a huge fall in the United States after Intel,'' Segawa said.

The Nikkei average fell 1.1 percent on Wednesday with technology shares losing ground on lacklustre results after the closing bell from chip giant Intel Corp. that raised concerns over high-tech demand.

''Still, trade will likely be slow, and the Nikkei is likely to move in a narrow range ahead of the peak of an earnings season next week,'' Segawa said.

Nikkei futures traded in Chicago finished the previous session at 18,090.00, above the Osaka close by 40 points, pointing a slightly higher opening.

Segawa said the Nikkei would likely move between 18,000 and 18,150 on Thursday.

U.S. stocks fell on Wednesday on deepening concerns that a crisis in lending could spread and a warning from the Federal Reserve chairman that weakness in the housing market could hurt economic growth for some time.

The Dow Jones industrial average was down 0.38 percent to end at 13,918.22.

STOCKS TO WATCH -- Tokyo Electric Power Co (TEPCO) T> The government may order the earthquake-hit nuclear plant run by TEPCO to stay shut for more than a year while a safety study is under way, the Nikkei business daily reported on Thursday.

-- Kawasaki Kisen Kaisha Ltd. T> The shipper will likely book 28 billion yen (9.8 million) in recurring profit for the April-June quarter, due to robust shipping demand from China and other countries, the Nikkei business daily said.

That compares with 10 billion yen for the same period a year earlier.

-- Sony Corp., Nintendo Co. Ltd.

Sales of Sony Corp.'s PlayStation 3 game console surpassed one million units in Japan in about eight months after its launch, more than four times as long as it took Nintendo's hot-selling Wii to reach the same point.

-- Fuji Heavy Industries Ltd., The maker of Subaru cars said on Wednesday it would suspend production on a mini-vehicle assembly line in Japan due to the stoppage of production at quake-hit parts-maker Riken Corp.

-- Chugai Pharmaceutical Co. Ltd The Japanese drug maker said it would book a first half operating profit of 35.8 billion yen, a 30 percent increase over the same period a year earlier and 17 percent better than its April forecast.

REUTERS MP VP0522