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Nikkei seen higher but rise limited before CPI

Thursday 30th November 2006

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Tokyo stocks are seen likely to move higher on Thursday, with investors snapping up energy stocks on higher oil prices and exporters such as Sony Corp. following gains on Wall Street.

But investors may be wary of pushing the market too high ahead of several key economic indicators on Friday, including jobless data and the core consumer price index (CPI), which could give clues on when the central bank will raise interest rates.

"Although investors will likely return to exporters, especially high-tech stocks, they are expected to hold back somewhat ahead of tomorrow's CPI data. Gains will be limited," said Yosuke Shimizu, head of investment information at Monex.

Nikkei futures pointed to a rise in the market. December futures traded in Chicago closed at 16,185 on Wednesday, up 85 points from their close in Osaka .

The Nikkei average is likely to move between 16,100 and 16,300 on Thursday, Shimizu said, after closing the previous session up 1.4% at 16,076.20.

Investors could shift money into shares in oil companies such as Nippon Oil Corp. after US crude oil for January delivery surged $1.47 to settle at $62.46 a barrel.

Steel stocks are also expected to do well following a report in business daily Nihon Keizai that Baosteel Group Corp. may ask Nippon Steel Corp. to take a stake in the Chinese company, Shimizu added.

In the United States, the Dow Jones industrial average rose 0.74% after a surge in oil prices lifted energy stocks and the government raised its estimate for economic growth in a key market for Japanese goods.

Japan will announce housing starts data for October later in the day. The market expects a 1.1% fall from a year earlier, compared with a 4% rise in the previous month.

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