TOKYO (Thomson Financial) - Japanese shares may open higher on Monday, tracking a Wall Street rebound on Friday when a stronger-than-expected jobs report helped ease fears about the health of the world's biggest economy.
The US Labor Department reported Friday that employers added 166,000 jobs in October -- the most in five months and nearly double what analysts had expected.
But lingering concerns about the credit crisis are expected to cap opening gains in Tokyo.
Concerns about the financial sector lingered Friday after the Wall Street Journal reported that Citigroup's board planned to meet over the weekend to discuss whether the bank will book further write-downs.
'In addition to the lingering subprime loan-related risks in the US, uncertainty about the near-term prospects for the Japanese economy may re-surface and weigh on the market,' Mizuho Research Institute analyst Koji Takeuchi said.
Meanwhile, investors will closely watch political developments after Japan's main opposition leader, Ichiro Ozawa, yesterday announced his resignation as head of the Democratic Party amid a rift over the ruling party's proposal to form a new coalition.
During talks with Ozawa Friday, Prime Minister Yasuo Fukuda proposed a coalition with the governing Liberal Democratic Party (LDP) in a bid to break the legislative deadlock over extending Japan's refuelling mission for US-led operations in Afghanistan.
Ozawa initially agreed to consider the proposal, but the idea was rejected by party executives.
On Wall Street Friday, the Dow Jones Industrial Average closed up 27.23 points or 0.20 percent at 13,595.10 after being down more than 120 points at one point in the session. The Nasdaq composite index rose 15.55 points or 0.56 percent to 2,810.38.
The Chicago-traded Nikkei futures contract settled at 16,510 points, up from 16,460 on the Osaka Securities Exchange on Friday, suggesting a firm start for the market.
On the Tokyo bourse, the Nikkei 225 Stock Average closed down 352.92 points or 2.1 percent at 16,517.48, while the broader TOPIX index dropped 35.61 points or 2.2 percent to settle at 1,600.17.
Ahead today, the Bank of Japan will release the minutes of its policy board meeting on September 18-19.
Takeda Pharmaceutical will release its earnings results for the half-year to September this afternoon.
Stocks to watch include Honda Motor Co Ltd following a report that Japan's second-largest automaker plans to launch its Acura line of luxury cars in Russia as early as 2008 in order to take advantage of rapidly growing demand.
Elpida Memory Inc may be in demand on a report that the world's fifth-largest DRAM chip maker plans to shift production of personal computer and server DRAMs to advanced 65-nanometer chips by next summer.
Japan Airlines Corp may advance after a report at the weekend said the carrier posted an operating profit of 40 billion yen in the first half ended in September, a sharp improvement from the loss of 8.16 billion yen in the same period of last year.
(1 US dollar = 114.85 yen)
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