Tokyo, Nov 2: Japanese stocks are seen falling on Friday after a Wall Street tumble set off by renewed credit worries and weak financial stocks, with a stronger yen also likely to drag on the market.
Financial stocks such as Mitsubishi UFJ Financial Group are likely to be one focus for the market after U.S. brokerages downgraded Citigroup and Bank of America, sending Citi plunging nearly 7 percent, its biggest daily drop in five years.
''U.S. banks shouldn't automatically have that much of an impact on their Japanese counterparts, but there's likely to be some inevitable spillover amid all the other selling today,'' said Yutaka Miura, senior technical analyst at Shinko Securities.
''This has renewed worries about how well the subprime problem has been dealt with. People were probably a bit too optimistic.'' Selling of Japanese stocks is expected to be fed by a stronger yen, with the day's direction likely to be determined by how currency moves in the morning.
In early Asian trade, the dollar was moving around 114.59 yen after falling as low as 114.50 yen overnight.
The fact that the Nikkei rose for two straight days through Thursday to close at a two-week high makes it vulnerable to selling, while thinning trade ahead of the weekend could contribute to volatility.
''Some support could emerge later in the day if the dollar strengthens and futures are bought, leading to short covering, while some in the market might buy on expectations of good U.S.
jobs data due out later today. But a lot depends on what the dollar does,'' Miura added.
The Nikkei is seen in a range from 16,400 to 16,850, starting off with selling. It ended Tokyo trade on Thursday at 16,870.40, a two-week closing high.
In a sign of how the Nikkei may move, Nikkei futures traded in Chicago closed at 16,540.00, down a hefty 370 points from the Osaka close of 16,910 The Standard&Poor's 500 Index saw its biggest percentage point drop since Aug. 9 - the day French bank BNP Paribas spooked global markets by freezing three funds that had invested in U.S.
The S&P 500 dropped 2.64 percent to 1,508.44. The Dow Jones industrial average sank 2.60 percent to end at 13,567.87. The Nasdaq Composite Index fell 2.25 percent to 2,794.83.
STOCKS TO WATCH
-- TonenGeneral Sekiyu KK Brazil's Petrobas will buy TonenGeneral Sekiyu's 87.5 percent stake in Okinawa refinery Nansei Sekiyu KK for several billion yen, the Nikkei business daily reported on Friday.
-- Yamada Denki Co Ltd, Best Denki Consumer electronics retailer Yamada Denki has approached rival Best Denki about buying more than a 40 percent stake, Jiji news agency said on Thursday, quoting Yamada Denki President Noboru Yamada.
-- Kirin Holdings Co Ltd Beer maker Kirin posted a 4.6 percent decline in quarterly operating profit on Thursday, hurt by rising raw materials costs and sluggish beer sales, and cut its full-year outlook by 3 percent.
-- Promise Co Ltd Promise, Japan's largest moneylender by market value, said on Thursday it now expects to beat its first-half forecast by a wide margin because of lower-than-expected costs for bad loans and loan guarantees.
Separately, sources familiar with the matter told Reuters that Promise and Acom Co Ltd are probably among the bidders for General Electric Co's consumer loan business in Japan.
-- Nomura Real Estate Holdings Inc Nomura Real Estate Holdings will likely post a 30 percent rise in group operating profit for the first half ended Sept 30 to above 35 billion yen, beating the company's forecast of 32 billion yen, the Nikkei newspaper reported on Friday.
The company was able to boost profit margins in its condominium development business thanks to robust sales of high-priced units in popular locations, while advertising and labour costs came in lower than expected, the paper said.
-- Konica Minolta Holdings Inc Konica on Thursday posted a 23 percent rise in half-year operating profit on robust sales of its multifunctional printers and flat TV components, and it raised its annual outlook to match market expectations.
-- Mitsubishi Chemical Holdings Corp Mitsubishi Chemical plans to boost spending on research and development to at least 360 billion yen over three years from 2008/09, with focus on seven areas including the auto and digital electronics industries, the Nikkei reported on Friday.