Tokyo to trade in tight range next week

Tokyo stocks are expected to trade in a tight range next week, after investors digested news that Greece may drop a plan to hold a referendum on the eurozone's rescue package, dealers said Friday. Tokyo stocks closed in positive territory, snapping a three-day losing streak, with confidence boosted by a European interest rate cut and Greece's decision to back away from its plan to hold the national vote.
In the week to November 4, the benchmark Nikkei 225 index at the Tokyo Stock Exchange lost 2.75 percent, or 249.07 points, to 8,801.40. The Topix index of all first-section issues was down 2.52 percent, or 19.41 points, to 752.02.
"Rangebound trade is expected unless a negative surprise hits markets regarding Greece," said Yumi Nishimura, senior market analyst at Daiwa Securities, noting market players had already priced in the expected cancellation of the referendum.
Traders awaited developments at Group of 20 talks in France, said Hiroichi Nishi, general manager of equity division at SMBC Nikko Securities.
"The tide may change depending on tonight (at the G20)," Nishi said.
Leaders of the world's top economies urged Europe to put its house in order as they started a two-day meeting.
As eurozone leaders at the summit in Cannes piled on the pressure, Greek Prime Minister George Papandreou said he was ready to drop his bid to put the European package aimed at keeping Greece in the euro to a vote.
Markets had feared that a "no" vote would undo an agreement struck last week to shore up the currency bloc after weeks of uncertainty. But the prospect for a solution remains uncertain as Germany and the European Union responded that Greece would be judged on its actions, not words.
"It has been a repetition of growing and then easing worries over Greece. Some risk-on mood will likely emerge if turmoil subdues a bit next week," Daiwa's Nishimura said, adding the Nikkei is likely to trade in a range of 8,700 and 8,800 next week.
The Nikkei could rise to 9,200-9,300 in the near future if there is no fresh negative news from Greece, she said. Market moves will also be determined by the outcome of monthly US jobs data and a raft of Chinese economic data next week.