TOKYO, Oct 2 (Reuters) - Japan's Nikkei share average was set to rise on Tuesday after data showed U.S. manufacturing expanded in September, beating expectations, while a softer yen should lend support to export-driven stocks.
Market participants said the Nikkei was likely to trade between 8,750 yen to 8,900 on Tuesday, with gains driven by investors covering short bets rather than new money flowing into the market.
"We can expect a modest gain today because the ISM was surprisingly positive and the yen has pulled back a little bit, but the upside remains heavy," said Yoshiro Ito, chief strategist at Okasan Online Securities.
"There are fundamental concern about corporate profits as we head into earnings season later this month."
U.S. stocks rose overnight after data showing the U.S.'s ISM index rose to 51.5 from 49.6 in August, outdoing expectations for a reading of 49.7, according to a Reuters poll, and offsetting concern about slowing growth in China and Europe.
Nikkei futures in Chicago closed at 8,810, up 0.3 percent from the close in Osaka .
The Nikkei lost 0.8 percent to 8,796.51 on Monday, falling to a three-week closing low on poor economic sentiment in Japan and Chinese manufacturing and as firms cut their interim earnings forecast due to dwindling demand.
The benchmark and the broader Topix index
gains before close after the Bank of Japan bought 3.8 billion yen ($49 million) of real-estate investment trusts (J-REITs) to support the market.
Concern about a global slowdown weighed heavily on the Japanese stock market through September, with the yen staying strong as a "safe haven" and thereby eating into exporters' overseas revenues once repatriated. The benchmark lost 1.5 percent in the last quarter.
> Wall St kicks off October with modest gains
> U.S. dollar, yen slide as data fuels safe-haven exit
> Bond prices up as stocks fade, data selloff subsides
> Gold near 1-year high after funds buy
> Oil ends down on weak growth signals in Europe, Asia
STOCKS TO WATCH -EACCESS LTD Softbank Corp announced shortly before Monday's close that it would acquire smaller mobile provider eAccess
through a stock swap deal valued at 180 billion yen ($2.3 billion), which will give eAccess shares a value of 52,000 yen, up from their closing price on Monday of 19,000 yen.
-SONY CORP , HITACHI LTD , TOSHIBA CORP
Japan Display Inc, created through the integration of the small-display arms of Sony, Hitachi and Toshiba, is to begin mass production of OEL panels for smartphones in 2014 in a bid to compete with Samsung Electronics Co Ltd
, the Nikkei business daily reported. -SEVEN & I HOLDINGS CO LTD , LAWSON INC , FAMILYMART CO
Japan's three biggest convenience store operators have grown their interim group profits by between 3 to 6 percent, according to the Nikkei business daily, due to the increasing popularity for their own-brand goods.
($1 = 78.0600 Japanese yen)
(Reporting by Sophie Knight; Editing by Eric Meijer)
Keywords: MARKETS JAPAN STOCKS/