Tokyo stocks may gain, Abe cabinet reshuffle eyed

TOKYO, Aug 27 (Reuters) A jump on Wall Street and a softer yen are seen pushing up Japanese stocks on Monday, with high-tech exporters such as Sony Corp among likely winners, but gains may be limited as the U.S. market heads for another volatile week amid concerns about economic health.

One focus in the market may be Bank of Tokyo-Mitsubishi UFJ Ltd and Mitsubishi UFJ Securities Co Ltd.

Australia's Challenger Financial Services Group Ltd said on Monday it had agreed to an alliance with Bank of Tokyo-Mitsubishi UFJ Ltd and Mitsubishi UFJ Securities to pursue opportunities in Asia.

Yutaka Miura, deputy manager of the equity information department at Shinko Securities, said the market is likely to open higher on impact of Wall Street but then expected to mostly drift, with eyes on the yen.

''There aren't really any domestic factors to dominate trade today. It's mainly watching what happens in the United States and the yen,'' he said.

Miura said Prime Minister Shinzo Abe's cabinet reshuffle set for later in the day is being watched by the market, but that it is not going to have much direct impact on Monday.

''Rather, it'll be seen as a long-term factor hinging on whether it can revive Abe's low support rates. The issue of political uncertainty could linger.'' Abe's reshuffle is crucial to restoring his sagging popularity, a month after an election that cost his coalition control of parliament's upper house.

Failure to come up with a winning combination could force Abe, already lagging badly in the polls, from office.

Nikkei futures traded in Chicago finished Friday at 16,495.00, 255 points higher than the Osaka close pointing to a higher opening.

In New York on Friday, the dollar recovered some ground in late trade to exit unchanged at 116.32 yen though it spent much of the session below 116 yen.

Market participants said they expect the benchmark Nikkei average to trade between 16,200 and 16,500 on Monday.

On Friday, the benchmark ended down 0.4 percent at 16,248.97, but finished the week up 6.4 percent to post its biggest weekly percentage gain since October 2002. The broader TOPIX index edged down 0.37 percent to 1,585.85.

U.S. stocks jumped on Friday with the tech-heavy Nasdaq Composite Index up 1.38 percent to close at 2,576.69.

STOCKS TO WATCH -- Matsushita Electric Industrial Co Matsushita said on Friday that Nokia's replacement of mobile phone batteries made by the Japanese electronics maker is likely to cost it 10-20 billion yen ((-2 million).

-- Nichii Gakkan Co, Goodwill Group Inc Comsn Inc., a scandal-hit unit of Goodwill Group, will likely sell its nursing home operations to medical service firm Nichii Gakkan for about 10-20 billion yen, Japanese media reported on Sunday.

-- Sekisui House Ltd Sekisui House is expected to post a group recurring profit of 49 billion yen for the first half ended July 31, down 37 percent from a year earlier but about 3 billion yen better than previously forecast, the Nikkei business daily said on Saturday.

The profit decline was smaller than expected because sales of condominium units and ready-made homes beat expectations, the newspaper said.

-- Nippon Telegraph and Telephone Corp (NTT) NTT group firms will combine three similar fibre-optic video distribution services -- OCN Theater, 4th Media and On Demand TV -- to improve efficiency and kick-start sluggish membership growth, the Nikkei business daily reported on Saturday.

REUTERS AK BST0510