* Nikkei reaches session high of 9,808.60 as Wall St gains,
yen weakens vs euro
* But weighed by concerns over impact of quake, radiation,
blackouts on Japan econ
* Nikkei sees stiff resistance at 200-MA of 9,822, 25-day MA
of 9,874
By Chikafumi Hodo and Antoni Slodkowski
TOKYO, April 4 (Reuters) - Japan's Nikkei stock average
nudged higher on Monday but struggled to extend gains as
uncertainty over Japan's economic outlook and a prolonged
nuclear safety crisis curbed enthusiasm on a weaker yen and a
rise in U.S. shares after strong payrolls data.
The Nikkei peaked at a session high of 9,808.60,
lifted by blue-chip exporters, but shied away from a two-week
high of 9,822.06 hit on Friday and its 200-day moving average
also seen near Friday's high.
Although it has recovered more than two-thirds of the
ground lost during its steep tumble in the aftermath of a
massive earthquake and tsunami on March 11, the Nikkei remains
more than 6 percent below its pre-quake levels and those who
thought the market would keep rising smoothly may be in for a
bitter surprise, players said.
"The Nikkei is up mainly because of gains in global shares,
but if you look at domestic factors, there are still plenty of
uncertainties," said Nagayuki Yamagishi, a strategist at
Mitsubishi UFJ Morgan Stanley Securities.
The Japanese government warned on Sunday that it could take
months to stop radiation leaking from the plant. []
"The fact that the Nikkei can't hold above 9,800 shows
investor caution towards the outlook for the Japanese economy,"
Yamagishi said.
Big Japanese manufacturers expect business conditions to
worsen in the next three months, responses to a BOJ survey
collected after the devastating quake showed.[]
By mid afternoon the benchmark Nikkei had gained 0.5
percent, or 48.66 points, to 9,757.05, with small-cap
reconstruction-related shares outperforming the market on
expectations for a pick up in demand.
Iwatani , a trading company specialising in gases
for industrial and household use, surged 8 percent to 297 yen
after the Nikkei business daily said it was running production
lines for portable gas cooking stoves and gas canisters at full
capacity to meet a post-earthquake surge in demand.
The broader Topix was nearly unchanged at 862.44.
SUPPLY CHAIN WORRIES
Japanese export-led stocks may not have benefited fully from
the yen's recent weakness on views some manufacturers may face
trouble restoring production to full capacity due to possible
disruption to domestic supply chains as well the impact of
potential power shortages, analysts said.
Underlying worries about bottlenecks, Sony Corp
slipped 1.2 percent to 2,640 yen after Goldman Sachs downgraded
the electronics maker to "neutral" from "buy" citing over
dependence on external suppliers for chipsets and lenses used in
its TVs and digital cameras.
MAY EARNINGS
Despite a fairly healthy rebound after the quake, analysts
said the Nikkei will likely come under selling pressure in May,
when companies report their first quarter earnings.
"Many firms have already delayed their earnings
announcements and some won't be able to publish forecasts, so
the market will probably get very jittery," said Fumiyuki
Nakanishi, group manager at SMBC Friend Securities.
Nakanishi added that the slump may be unpredictable because
investors won't be able to accurately gauge how to price in the
risks caused by damage to corporate performance after the quake.
Shares of electric machinery maker IHI Corp jumped
4.5 percent to 211 yen in heavy trade after the Nikkei business
daily said IHI and Sweden's Atlas Copco <ATCOa.ST> will soon
sign a memorandum of understanding to partner on the marketing
of industrial-use compressors.
U.S. employment grew solidly for a second month
in March and the jobless rate hit a two-year low of 8.8 percent,
spurring solid gains on Wall Street and boosting hopes for the
global economy to remain on track for sustainable recovery.
[]
Shares in Tokyo Electric Power dropped 0.5 percent
to 447 yen, weighed down by uncertainty over the situation at
its crippled Daiichi Fukushima nuclear power plant.
(Reporting by Antoni Slodkowski and Chikafumi Hodo; Editing by
Joseph Radford)
