Tokyo shares outlook - Easier in cautious trade ahead of BoJ policy decision

Tokyo shares outlook - Easier in cautious trade ahead of BoJ policy decision

	Published : Thu, 18 Jan 2007 00:07 By : Agencies Print this Story

TOKYO (XFN-ASIA) - Share prices are expected to open easier in extremely cautious trading, with investors seen staying out of the market as they await the Bank of Japan's announcement on whether to raise interest rates following the two-day policy board meeting, dealers said.

While the majority of investors now believes that the central bank will hold rates steady once again, they also cannot fully rule out a possible increase, because the decision is expected to be close.

Some worries over the prospects of the US stockmarket may also keep a lid on the local market, after the US Labor Department said the PPI, an indicator of inflation, rose by 0.9 pct in December, faster than the market expected, thereby raising concerns that the Federal Reserve might have reason to resume its rate-hike cycle to curb inflation, dealers said.

In New York, the Dow Jones Industrial Average closed down 5.44 points or 0.04 pct at 12577.15, while the Nasdaq composite index ended 18.36 points or 0.74 pct lower at 2,479.42.

In Chicago, the Nikkei futures contracts settled at 17,190 points, against 17,270 at the Osaka Securities Exchange yesterday, suggesting a softer start for the Tokyo market.

On the Tokyo bourse yesterday, the Nikkei 225 Stock Average closed up 58.89 points or 0.34 pct at 17,261.35, while the TOPIX index of all issues listed on the Tokyo Stock Exchange's first section ended the session up 3.22 points or 0.19 pct at 1,706.76.

Ahead in Japan, the Ministry of Economy, Trade and Industry, will release the tertiary index for November, while the Cabinet Office will announce resived leading and coincident indexes for November.

The Real Estate Economic Institute will announce condominium sales in greater Tokyo, Osaka regions for December and Japan Department Stores Association will publish the outcome of December store sales.

Stocks to watch include Tanabe Seiyaku Co Ltd and Mitsubishi Chemical Holdings on a report that Tanabe and Mitsubishi Chemical's drugmaking unit are in the final stages of negotiations to merge this coming autumn, to create Japan's sixth largest drugmaker by sales.

Mitsubishi Corp may be in focus on a report that the trading house has invested some 15 bln yen in South Korea's POSCO, raising its stake in the steelmaker to 1.4 pct from roughly 0.9 pct.

Showa Shell Sekiyu KK may rise on a report that the oil refiner is expected to post a group current profit of 73 bln yen for 2006, higher than own estimate of 70 bln yen projected earlier, due to improved margins on gasoline in the October-December quarter resulting from a drop in crude prices.

(1 usd = 120.68 yen)

yasuhiko.seki@xfn.com