Japan's Nikkei share average is expected to hold in a range on Wednesday, with investors reluctant to move ahead of an EU summit beginning on Thursday, although bargain hunting could emerge after two days of losses.
Market players said the Nikkei was likely to trade between 8,600 and 8,750 on Wednesday after Nikkei futures in Chicago closed flat from the close in Osaka of 8,690.
"Investors are waiting for the conclusion of the EU summit, even though they aren't expecting anything concrete to come out of it," said Yoshihiro Ito, chief strategist at Okasan Online Securities.
Euro zone leaders are due to meet on Thursday and Friday to discuss strategies to tackle the euro zone debt crisis. Spain's ability to fund its own debt worsened overnight as 10-year bond yields rose after demand fell for shorter-term bills at an auction. The country's request for a loan to prop up its ailing banks is seen by some as a precursor to a larger bailout.
"There's few factors to influence buying today, other than the exchange rate, which could provoke a shift from blue-chips to small and mid-sized domestic stocks," Ito said.
The yen was held under 80 to the dollar overnight as mixed data came out of the US, showing an increase in house prices in April, but consumer confidence struck a five-month low in June.
The Nikkei closed 0.8% down on Tuesday to 8,663.99, its lowest level in a week, but held above resistance at its 25-day moving average around 8,597.
The benchmark index is now down 14% on the quarter, which concludes on Friday, having reversed most of its rally of 19.3% in the first quarter on concerns about the euro zone crisis and signs of slowing growth in the US and China.
STOCKS TO WATCH
TOSOH CORP
Tosoh said on Tuesday it is preparing to restart its No. 3 vinyl chloride monomer plant in western Japan from Wednesday, the first time since a fire in mid-November. The 400,000 tonne-capacity unit is expected to resume full operations on July 6, a spokesman said.
NOMURA HOLDINGS
Nomura Holdings CEO Kenichi Watanabe will face shareholders on Wednesday to speak about an insider trading probe that has hit Japan's top brokerage after the company confirmed earlier this month that it was the source of leaks on planned share offerings.
