TOKYO (Thomson Financial) - Japanese shares may open higher on Wednesday on expectations that a series of recapitalisation plans by US financial institutions and the concerted liquidity injection by central banks may ease worries about US banks which had been battered by the credit turmoil.
Merrill Lynch & Co was the latest to secure fresh funding after it said Monday it will receive up to 6.2 billion dollars from two investment groups - Singapore's government-controlled investment fund, Temasek Holdings, and US-based money manager Davis Selected Advisors.
Merrill Lynch now joins a number of other global banks -- including Citigroup Inc, UBS AG, and Morgan Stanley -- which have managed to secure fresh capital to deal with losses stemming from bad bets in subprime mortgages.
Central banks in the US, Europe, Canada, UK and Switzerland earlier this month announced their liquidity injection scheme, also aimed at preventing funding problems around year-end when funding needs at private financial institutions increase.
'Investors are watching closely if smaller financial institutions may be able to win similar capital enhancement deals, as well as the forthcoming quarterly results from US banks,' Societe Generale Asset Management senior analyst Akio Yoshino said.
'Although the market may no longer have to worry about funding problems at US financial institutions, investors need to assess how the subprime problem will affect actual economic activity in the US,' he said, citing the release next month of the US ISM survey.
In Japan, investors will be looking out for a series of economic data due for release this week, including industrial output and housing starts ahead of the long holiday next week.
US financial markets were closed Tuesday for the Christmas holiday.
In Tokyo, the Nikkei 225 Stock Average finished up 295.59 points or 1.9 percent at 15,552.59, while the broader Topix index rose 26.83 points or 1.8 percent to 1,496.03.
Ahead, the Bank of Japan will release the minutes of its policy board meetings on Oct. 31 and Nov. 12-13.
Department store operator Mitsukoshi Ltd will announce its results for the nine months to November.
Stocks to watch include Kansai Electric Power Co Inc on a report that the Japanese electric utility company and trading house Sumitomo Corp will join forces with a state-run Kazakh resources company to process uranium for nuclear power generation.
(1 US dollar = 114.08 yen)
yasuhiko.seki@thomson.com yas/ms COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.