TOKYO, Aug 29 (Reuters) Japanese stocks are set to test the downside on Wednesday, with high-tech e

TOKYO, Aug 29 (Reuters) Japanese stocks are set to test the downside on Wednesday, with high-tech exporters such as Canon Inc under pressure after economic and credit worries drove Wall Street sharply lower overnight and the yen firmed.

''The market is likely to see selling, led by futures, right off the bat as the yen has strengthened considerably,'' said Kazuhiro Takahashi, a general manager of the equity marketing department at Daiwa Securities SMBC.

Financial shares may be weak along with their U.S. peers after Merrill Lynch warned that ailing credit markets will hurt bank profits, Takahashi said. But he added that Japanese banks are still unlikely to be directly hit by the problems.

''It is the same old story, and the situation hasn't changed: The Japanese market will likely move just to cement the downside,'' he said.

Nikkei futures traded in Chicago finished the previous day at 15,950.00, 320 points below the Osaka close pointing to a much lower opening.

Market participants said the Nikkei may trade between 15,900 and 16,100 after finishing Tuesday down 0.09 percent at 16,287.49.

In New York, the dollar fell 1.2 percent to 114.36 yen.

U.S. stock indexes tumbled more than 2 percent on Tuesday, with the Dow Jones industrial average skidding 2.10 percent to end at 13,041.85.

Merrill Lynch downgraded Bear Stearns Cos, Lehman Brothers and Citigroup to ''neutral'' from ''buy'' and lowered estimates for the banks' earnings due to turbulence in the debt market, slowing takeover activity and upheaval in the mortgage sector.

STOCKS TO WATCH -- Marubeni Corp Japanese trading house Marubeni plans to spend about 23 billion yen ($200 million) to buy a 10 percent stake in a liquefied natural gas project in Peru to supply utility and gas companies in Japan, the Nikkei business daily said on Wednesday.

-- Yahoo Japan Yahoo Japan said on Tuesday it would take a 16.5 percent stake in Kakaku.com Inc's online travel unit 4travel Inc. for 610.9 million yen.

The Internet media firms aim to share content and raise advertisement revenues from the deal, to take place on Sept. 5.

Kakaku.com, which would then hold 73.7 percent in 4travel, expects to post an extraordinary profit of 400 million yen for the year ending March from the stake sale.

-- Chip stocks Orders for Japanese chip-making equipment fell in July as computer memory makers reined in spending plans amid an inventory glut, an industry group said on Tuesday.

-- Isuzu Motors Ltd Japanese truck maker Isuzu Motors said on Tuesday it aims to lift its operating profit by 40 percent in the year to March 2011 as it expands its sales overseas and slashes costs through stepped-up cooperation with other automakers.

-- NTT DoCoMo Inc Japan's largest mobile phone carrier NTT DoCoMo will expand discounts to smaller companies in an effort to grab business from rival Softbank Corp amid an escalating price war.

-- Mitsubishi Motors Corp Japanese automaker Mitsubishi Motors said it had no equity relation with MMC Automotriz S.A., a company that has been hit with a $1.02 million tax tab by Venezuela's tax authority.

-- Astellas Pharma Inc.

Japan's Astellas Pharma said on Tuesday that it will buy back its shares for up to 45 billion yen or 1.6 percent of its total outstanding shares from Aug. 29 to Sept. 20.

-- Fujifilm Holdings Corp, Mitsubishi Paper Mills Ltd Fujifilm and Mitsubishi Paper Mills said on Tuesday they agreed on a tie-up for photographic paper. As part of the deal, Mitsubishi would issue new shares worth 2 billion yen to Fujifilm and use the money for a 4 billion yen investment in base-paper manufacturing facilities, they said.

Reuters RKM VP0505