Nikkei index predictions may trade near at 9,400 on Friday june 17 2011

Nikkei index predictions may trade near at 9,400 on Friday june 17 2011 ; The Nikkei average was flat on Friday after dipping below a support line at 9,400 as investors stayed cautious about developments in Greece's debt problems, offsetting the effect of a rebound in U.S. stocks.

Analysts said the Nikkei may trade near at 9,400 as bargain-hunting opportunities are also expected due to low valuations of Tokyo stocks.

The Nikkei has traded mainly between 9,400 and 9,800 since April and analysts expect this range to hold for the next few weeks, saying Tokyo shares are trading roughly at book value compared with around 2.1 times book value for the S&P 500

"Bargain hunting may support the market to some extent, but volume may be low before the weekend," said Hiroichi Nishi, general manager at SMBC Nikko Securities.

He also said the Nikkei may stay above 9,400 in the next few days as there are expectations for buying of exchange-traded funds by the Bank of Japan if it stays below that level for long.

The Nikkei was flat at 9,410.68 at the midday break, while the broader Topix index fell 0.4 percent to 809.00.

Volume was low, with only 796 million shares changing hands on the Tokyo stock exchange's main board, and is set to end lower than Thursday's 1.79 billion shares and the average for the past six sessions.

Analysts said concern about tax hikes is adding to the market's sluggishness, while a newspaper reported that Japan's ruling party aims to raise corporate and income taxes to repay new government bonds for funding massive reconstruction needed
after the March 11 earthquake.

The ruling Democratic Party (DPJ) is considering raising both taxes by around 10 percent, generating 1-2 trillion yen ($12.4 billion-$24.8 billion) in annual revenue to pay back borrowing for reconstruction over a decade, the Mainichi newspaper
reported this week.

"It looks like tax hike debates are on the table, and this is not good for either foreign investor sentiment or consumer sentiment," said Hideyuki Okoshi, general manager at ChibaginSecurities.

DeNA , a mobile phone gaming site operator, rose 4.8 percent to 3,280 yen after it raised its quarterly earnings outlook on Thursday.

It now expects to post a net profit of 9.2 billion yen for the April-June quarter, compared with previously forecast 7.6 billion yen.

Shares of Sekisui House , Japan's largest homebuilder, fell 5.7 percent to 717 yen after it said on Thursday it would issue a 50 billion yen bond to help fund expansion in China and repay debt.

Facing a stagnant home market, Sekisui House needs to fund growth overseas to keep profits rising. ($1 = 80.615 Japanese Yen)

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