Nikkei set to test 8-month high as yen weakens

TOKYO, Dec 13 (Reuters) - Japan's Nikkei average is expected to open higher and test 9,700 on Thursday, a level not seen since early April, as the yen hit a 8-1/2-month low versus the dollar on expectations the Bank of Japan will implement more aggressive monetary easing. The Nikkei is likely to trade between 9,600 and 9,750, strategists said, while Nikkei futures in Chicago closed at 9,670 on Wednesday, up 0.9 percent from the Osaka close of 9,580. "The yen depreciation is a big factor for the Japanese equities market," said Takashi Hiroki, chief strategist at Monex Inc. "The Japanese market will chase the upside. The Nikkei will likely rise to 9,700." The Japanese currency was quoted at 83.19 yen to the dollar on Thursday, after touching a 8-1/2-month low of 83.31 on Wednesday after the U.S. Federal Reserve said it would extend its bond-buying economic stimulus programme as investors bet on bolder move of its own from the Bank of Japan after Sunday's general election. Shinzo Abe, the leader of the main opposition party which is expected to win the election, has called for the central bank to adopt extreme policy action, including setting an inflation target of 2 percent and embarking on "unlimited easing". On Wednesday, the Nikkei rose 0.6 percent to 9,581.46 to a near eight-month closing high, while the broader Topix index climbed 0.7 percent to 791.29. So far this year, the Topix has handed investors a total return of 10.4 percent in local currency after losing 17 percent in 2011, according to Thomson Reuters Datastream. The Topix carries a 12-month forward price-to-earnings ratio of 12.1, cheaper than the U.S. S&P 500's 12.6 but more expensive than the pan-European STOXX Europe 600's 11.3, data from Datastream showed.

> Wall St ends almost flat, Bernanke warns on 'fiscal cliff'

> Euro gains on steady U.S. rates, Fed bond buying plan

> Treasuries drop, Fed announces new bond-buying programme

> Gold rises after Fed makes surprises low-rate pledge

> Oil up on more Fed stimulus, OPEC holds output target

STOCKS TO WATCH --MITSUBISHI UFJ FINANCIAL GROUP Mitsubishi UFJ Financial Group is set to buy Bank of America Corp's stake in their Japanese private banking venture for 39 billion yen ($470.3 million), Bloomberg reported, quoting two people with knowledge of the matter. Separately, Bank of Tokyo-Mitsubishi UFJ, a unit of Mitsubishi UFJ Financial Group, plans to buy a 20 percent interest in VietinBank from the Vietnamese government for about 60 billion yen ($725 million), the Nikkei reported.

--TOYOTA MOTOR CORP Toyota will alert about 700,000 owners of three Lexus models built over the last several years of a problem with the emergency trunk release, Consumer Reports magazine said on Wednesday. --HONDA MOTOR CO Honda will recall 871,000 vehicles that could roll away after the ignition key has been removed, including 807,000 in the United States, the company said on Wednesday.

--MITSUBISHI HEAVY INDUSTRIES United Technologies Corp, the world's largest maker of elevators and air conditioners, said it will sell the power systems business of its aircraft engine unit, Pratt & Whitney, to Mitsubishi Heavy Industries. --CYBERAGENT INC, YAHOO JAPAN CORP Yahoo Japan said on Wednesday that it will buy internet advertising firm CyberAgent's foreign exchange operations arm for 21 billion yen ($254 million).