Nikkei seen moving lower on Wall St., stronger yen

TOKYO, July 25 (Reuters) A tumble in U.S. stocks and a stronger yen are seen weighing down Japanese stocks on Wednesday, with high-tech shares such as Canon Inc. and exporters likely the main losers.

Another focus in the market may be Mitsukoshi Ltd., Japan's No.4 department store operator, and fifth-ranked Isetan Co. Ltd.

The Nikkei business daily said on Wednesday that Mitsukoshi and Isetan are set to enter negotiations to form a capital tie-up, eyeing a future merger.

''The word is 'fall' as two factors -- a rise in U.S. stocks and a softer yen -- that helped the market rally have turned around,'' said Yutaka Miura, deputy manager of the equity information department at Shinko Securities.

''The Nikkei's bottom will likely be around the 17,800 level, but if the yen goes beyond 119 yen, it could further extend losses.'' In New York on Tuesday, the dollar sank 0.7 percent to 120.25 yen after touching a two-month low of 120.03 yen Nikkei futures traded in Chicago finished the previous session at 17,745.00, below the Osaka close by 275 points, pointing to a lower opening.

Miura said the Nikkei would likely move between 17,700 and 18,000 on Wednesday after finishing Tuesday up 0.21 percent at 18,002.03.

Miura said investors are likely to sell large high-tech stocks that had led the market advance, and buying of issues with solid earnings results could also be limited considering Wednesday's market environment.

Japanese companies scheduled to report results on Wednesday include Matsushita Electric Industrial Co. Ltd., Sharp Corp., Nintendo Co. Ltd. and Honda Motor Co. Ltd.

U.S. stocks tumbled on Tuesday as disappointing results from DuPont Co. and Countrywide Financial Corp. heightened concerns about the housing market, while lower demand than expected for Apple Inc.'s iPhone launched last month also soured the mood for technology shares.

The Nasdaq Composite Index was down 1.89 percent to finish at 2,639.86.

STOCKS TO WATCH -- Toshiba Corp., Fujitsu Ltd. and NEC Electronics Corp. T> Toshiba, Fujitsu and NEC Electronics have agreed to jointly develop advanced 32-nanometre chips to better keep up with bigger rivals, the Nikkei business daily said on Wednesday.

-- Toshiba, Ikegami Tsushinki T> Japanese chip maker Toshiba agreed to take a roughly 20 percent stake in broadcasting equipment maker Ikegami Tsushinki for 2.46 billion yen (.43 million), as the two firms plan to co-develop professional camera and recording equipment using flash memory.

-- Kao Corp. T> Japan's biggest household products maker beat analysts' forecasts with a 6 percent rise in quarterly operating income, likely putting it on track to exceed its full-year outlook.

-- Nissan Motor Co. T> Japan's third-largest automaker posted a 3.2 percent drop in quarterly operating profit as a worsening product mix favouring smaller, cheaper cars hit margins, and kept its full-year forecasts unchanged despite the weaker yen.

-- JVC, Kenwood Corp. T> Japanese electronics maker Kenwood and asset manager Sparx Group will buy a combined stake of about 30 percent in JVC in a 1 million deal that will take the loss-making JVC off Matsushita Electric Industrial's consolidated accounts.

-- Hitachi Ltd.

Japanese industrial electronics maker Hitachi aims for 54 percent sales growth in its loss-making electrical power segment and a 3 percent profit margin in three years by marketing low-emission boilers and efficient turbines.

-- Aiful Corp. T> Aiful posted a 50 percent slide in first-quarter net profit on Wednesday, squeezed by restructuring costs and a decline in new loans, yet Japan's largest consumer lender stuck by its forecast to return to profit this year.

-- Seiko Epson Corp. and Canon Inc. T> Lexmark International Inc., a rival of Seiko Epson and Canon in the ink jet printer market, said on Tuesday its quarterly net income fell 16 percent as sales of ink cartridges fell and it sold more of its lower-margin printers.

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