Nikkei may struggle below 10,000, machine orders eyed

Japan's Nikkei average is likely to move narrowly on Wednesday as it nudges nearer the psychologically key 10,000 mark, but technology stocks may gain after Texas Instruments' improved outlook lifted their peers on Wall Street.

Traders will also be watching Japan's machinery orders data due before the start of trade. Core orders, a leading indicator of capital spending, are seen rising 0.4 percent in April as signs mount that a sharp decline in corporate activity is starting to abate.

Kobe Steel and Showa Denko may attract attention after the Nikkei business daily said six Japan firms including the two will end aluminium smelting operations in Venezuela due to a dispute over prices with the Venezuelan government, their joint venture partner.

''The Nikkei average is facing headwinds right before the 10,000 mark,'' said Hiroichi Nishi, general manager at Nikko Cordial Securities.

''Investors are cautious, partly as the market seems overheated, and also ahead of the settlement of Nikkei options and futures later in the week and a string of important economic indicators such as machinery data and U.S. retail sales.'' But Nishi said investors will likely buy on dips, encouraged by optimism that the global economy may have hit a floor.

Nikkei futures traded in Chicago ended at 9,815 on Tuesday, up 0.4 percent from the Osaka close, pointing to a slightly higher start.

Market participants expect the benchmark Nikkei to move between 9,700 and 9,850 on Wednesday. It fell 0.8 percent the previous day to end at 9,786.82.

The Nasdaq Composite Index rose 1 percent on Tuesday, after Texas Instruments raised its quarterly earnings and revenue targets, signaling improving demand in the chip market and lifting shares of technology firms.

STOCKS TO WATCH -- Sony Corp, Panasonic Corp Falling prices of televisions and other products are expected to depress operating profits at Sony and Panasonic by about 1 trillion yen ($10.2 billion) combined in the year through next March, the Nikkei business daily reported.

-- Toshiba Corp Toshiba expects to generate about 130 billion yen of positive free cash flow this fiscal year, a turnaround from the 351.3 billion yen of negative free cash flow in fiscal 2008, the Nikkei business daily reported.

-- Mizuho Financial Group Inc Mizuho, Japan's second-largest bank, said it will cut the conversion price for preferred stock issued in spring 2003 that will raise the number of common shares investors receive, the Nikkei business daily reported.

-- Softbank Corp Softbank said it would begin sales of its new iPhone 3GS in Japan from June 26, priced at 11,520 yen for the 16-gigabyte model and 23,040 yen for a 32-gigabyte model.