Nikkei set to rise on Intel, gains seen limited

Japan's Nikkei average is expected to open higher on Friday on rises in tech shares thanks to brisk earnings results from Intel Corp, but gains may be limited by weak earnings results from domestic retailer Fast Retailing.

Prime Minister Naoto Kan was set to reshuffle his cabinet on Friday, appointing fiscal hawk Kaoru Yosano as economics minister but market partipants said the reshuffle was unlikely to have an impact on the day's trade. The January settlement of Nikkei 225 options is also in focus although not expected to have a big effect on the market. "Fast Retailing may have a big downside impact, therefore the Nikkei index may turn negative at some point after faring well in early trade," said Yutaka Miura, senior technical analyst at Mizuho Securities. "Also, investors may not be willing to hold large buy positions over the weekend due to short-term overheating." Intel Corp's revenue and margin forecasts beat expectations on healthy technology spending, but Fast Retailing Co, one of the largest components of the Nikkei benchmark on a weighted basis, said first-quarter operating profit fell 18.4%. Shares in the world's largest chipmaker gained 2.7% in late trade. "If the dollar is back above 83 yen during the day, more buying in electronics stocks may be seen," said Hiroichi Nishi, general manager at Nikko Cordial Securities. "Some exporters may rise on receding worries about the euro." Easing recent worries about the credit crisis in Europe, Spain and Italy followed Portugal with successful debt sales on Thursday. Analysts say the Nikkei 225 stock average is expected to move in a range of 10,500-10,650 after ending up 0.7% at 10,589.76 on Thursday, its highest close in eight months. Immediate resistance looms at 10,638.23, a high hit in May last year. Nikkei futures traded in Chicago closed at 10,565, up 5 points from 10,560 in Osaka.