Nippon Steel may lead gains by companies which rely on the strength of the domestic market for sales growth if the government's "tankan" survey of business sentiment shows improved confidence for the prospects for full economic economy.
"Foreigners don't want to hold too many stocks through to next year," said Winston Barnes, a manager at WestLB Securities Pacific. "Sentiment in the market, though, is good at the moment because of the strength of the market" and the economy.
The Nikkei 225 stock average fell 0.5 per cent last week to 18,271.85.
The Bank of Japan releases the quarterly "tankan" business confidence survey at 8.50am tomorrow. This is expected to show sentiment rose to its highest level for two years. Economists anticipate the index for large manufacturers will register minus 15, an improvement from the minus 22 recorded in September, as they start to see the benefits of past cost- cutting efforts. That would be the highest reading for two years.
Investors, however, are unlikely to regard this as good enough to switch funds to equities from fixed income, and bonds could remain little changed. Last week, the benchmark government bond yield fell by 3.2 basis points to 1.770 per cent.
Other indicators due this week could also show an economy on the mend. On Tuesday, the Tokyo Shoko Research Company releases its November bankruptcy report, while on Wednesday, the Ministry of International Trade and Industry publishes a revised report on October industrial production in Japan.
Foreign investors may sell telecommunications and other shares on continuing Y2K concerns.
Exporters such as Honda Motor, Japan's second-largest vehicle maker by volume, may gain after last Friday's favourable inflation report in the US.Reuse content