Nikkei set to extend gains on strong US data, weaker yen
TOKYO, Aug 14 (Reuters) - Japan's Nikkei share average is set to rise on Wednesday on the back of a confluence of positive catalysts, led by a weaker yen and strong U.S. data, though the summer holiday lull may temper the upside. Market players said the benchmark Nikkei was likely to trade between 13,800 and 14,050 during the session. On Tuesday, the index climbed 2.6 percent in thin summer trade, rebounding from a 6-1/2-week low hit on Monday following weaker-than-expected Japanese GDP data. Nikkei futures in Chicago closed at 13,960, up 0.8 percent from the close in Osaka of 13,850. "Although the Nikkei may open higher on a weak yen and overnight gains in U.S. stocks, I think the upside is limited," said Hiroaki Hiwada, a senior strategist at Toyo Securities. "There are not many trading factors around and many market players are in summer holiday mode." The yen last traded at 98.28 yen to the dollar, further moving away from a seven-week high of 95.810 touched last Thursday after the U.S. posted strong growth in retail sales, a key gauge of consumer spending in the world's biggest economy. A weaker yen sharpens Japanese exporters' competitive edge in global markets and boosts their dollar earnings when repatriated. The rising U.S. retail sales in July, combined with a higher ZEW German sentiment index and euro zone industrial production, painted a rosier picture of the global economy. The U.S. is Japan's biggest export market. Wall Street's uptick overnight should also underpin Japanese equities. The benchmark Nikkei has risen 33 percent this year, while the yen has fallen 13 percent versus the dollar, largely driven by the Japanese government's aggressive stimulus policies.
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