TOKYO: Japan's Nikkei share average is set to tread in range on Wednesday ahead of a ruling from Germany's highest court on whether the euro zone's bailout fund can legally go ahead, and before a policy review by the US Federal Reserve ending on Thursday.
Market players said the Nikkei was likely to trade between 8,750 and 8,850 on Wednesday, with exporters seen coming under pressure from a firmer yen against the dollar.
Investors are hoping that Germany's constitutional court will rule later on Wednesday that the European Stability Mechanism (ESM) can go ahead, giving further support to the region's highly indebted nations after the European Central Bank said it would begin buying their sovereign bonds on Friday.
US stocks gained overnight as investors speculated that the Fed will announce a fresh round of "quantitative easing" at the end of its two-day FOMC meeting on Thursday, although Apple Co's loss overnight ahead of the rumoured release of its iPhone 5 on Wednesday dragged on the Nasdaq.
"Although Germany's ruling is important, I think the more influential factors for the Japanese market are the boost for China-related stocks in the US, Apple and the Fed's decision," said Masayuki Doshida, senior market analyst at Rakuten Securities.
Construction machinery maker Caterpillar Inc rose 1.7 percent on Tuesday, boosted by China's approval of 60 infrastructure projects worth more than $150 billion on Friday, which is hoped to energise an economy mired in its worst slowdown in three years.
Nikkei futures in Chicago closed at 8,810, up 0.1 percent from the close in Osaka of 8,800.
The Nikkei ended down 0.7 percent at 8,807.38 in light trade on Tuesday, but held above its 75-day moving average at 8,780.30. The benchmark is up 4.2 percent on the year. Dow climbs to highest since 2007, Fed optimism builds US dollar drops as Fed weighs; euro eyes German ruling Heavy supply weighs on prices before Fed.
Gold rises after Moody's US credit warning hits dollar Oil rises awaiting Fed meeting, German court
STOCKS TO WATCH
- OKI ELECTRIC INDUSTRY CO LTD
Oki Electric Industry said on Tuesday it will likely make a loss of 30.8 billion yen, or around $400 million, due to improper accounting at its Spanish unit over six years, a much larger amount than the 8 billion yen estimated by the company in August.
- AEON CO LTD
Aeon, which operates supermarkets and convenience stores, plans to combine its banking and credit card units to consolidate its financial services in January, the Nikkei business daily said.
Aeon Credit Service Co will make Aeon Bank a wholly owned unit through a stock swap and then will be turned into a holding company for the group's financial services in April.
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