Tokyo shares outlook - Higher on Wall St lead as Fed rekindles rate cut hopes

Tokyo shares outlook - Higher on Wall St lead as Fed rekindles rate cut hopes

	Published : Wed, 21 Mar 2007 23:30 By : Agencies Print this Story

TOKYO (XFN-ASIA) - Share prices are expected to open higher following strong gains on Wall Street overnight after a statement by the US Federal Reserve revived hopes for a possible rate cut there, dealers said.

In the statement that accompanied the Fed's decision to leave short-term interest rates unchanged at 5.25 pct, the central bank didn't refer to the possibility of 'additional firming' of rates as it did in January.

The Fed said 'future policy adjustments' will depend on inflation and growth -- more neutral language that the market interpreted as opening the way for a possible rate cut -- although it indicated that it remains vigilant about the threat of inflation.

The stable yen is also likely to benefit shares of blue-chip exporters, dealers said.

The Dow Jones Industrial Average closed up 159.42 points or 1.30 pct at 12,447.52, while the Nasdaq composite index gained 47.71 points or 1.98 pct at 2,455.92.

In Chicago, the Nikkei futures contract settled at 17,475 points compared to 17,140 at the Osaka Securities Exchange Monday, suggesting a firm start for the Tokyo market.

On the Tokyo bourse Monday, the Nikkei 225 Stock Average closed up 153.65 points or 0.90 pct at 17,163.20, while the broader TOPIX index added 14.21 points or 0.84 pct at 1,708.29.

Financial markets here were closed for a public holiday yesterday.

Ahead in Japan, the Ministry of Finance will announce 10 minutes before the opening bell preliminary trade data for February, while the MoF and the Cabinet Office will release their quarterly survey on business sentiment for January-March.

The Japan Chain Stores Association will release in the afternoon supermarket store sales for last month, while the Ministry of Land, Infrastructure and Transport will announce results of its annual survey on land prices.

Stocks to watch include Mazda Motor Corp following a report that the automaker plans to increase by fiscal 2008 domestic production by about 15 pct from the fiscal 2006 level and introduce a hydrogen-electric hybrid vehicle by that year.

Mitsui & Co may be active on a report that the trading house and Brazilian state-owned oil company Petroleo Brasileiro SA plan to jointly produce in Brazil bioethanol for automobiles.

Hitachi may be in focus too following a report that the firm has decided to shut down this year a Mexican plant making components for hard disk drives due to falling profitability there.

(1 usd = 117.59 yen)

yasuhiko.seki@xfn.com

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