* Nikkei up on hopes that recession easing, but sluggish
* Profit-taking emerges after sharp gains on Thursday
* Nippon Oil up on report of likely Iraq oil deal
* Suzuki Motor up on possible VW cooperation deal
By Elaine Lies
TOKYO, June 26 (Reuters) - Japan's Nikkei stock average
clawed 0.2 percent higher on Friday, after stronger-than expected
earnings from a U.S. retailer buoyed hopes that the U.S. economic
recession may be easing.
Nippon Oil Corp <5001.T> jumped over 4 percent after a
newspaper reported that it and other Japanese companies are in
the final stage of talks with Iraq to win the development
contract for Iraq's huge Nassiriya oilfield. []
Suzuki Motor <7269.T> climbed after a source familiar with
the matter said Volkswagen <VOWG.DE> is exploring a potential
cooperation deal with Suzuki as a way to boost its expertise in
the area of ultra-small cars. []
Though market analysts had predicted sharp gains prior to the
opening, rises were sluggish in thin trade as investors moved to
lock in profits after the average posted its best day in a month
on Thursday, rising 2.2 percent.
The Nikkei gained 23.21 points to 9,819.29 after briefly
moving into negative territory, while the broader Topix <>
rose 0.3 percent to 922.68.
"The market climbed yesterday mainly on demand factors and
not on fundamentals, and investors are moving to take profits
ahead of the weekend," said Hiroaki Osakabe, fund manager at
Chibagin Asset Management.
But sharp losses were unlikely after the Nikkei on Thursday
climbed back above its 25-day moving average, which provided
support throughout the benchmark's three-month rally from March.
The 25-day moving average now comes in around 9,700.
Better-than-expected earnings from U.S. retailer Bed Bath &
Beyond <BBBY.O> helped revive a sense that the U.S. recession may
be starting to ease.
"Everyone recognises that the market is heading for recovery,
and this is likely to be verified when Japanese companies start
reporting results next month. The mood is improving," said
Hiroichi Nishi, general manager at the equity division of Nikko
Cordial Securities.
He added that while the Nikkei appeared to be gaining some
strength from so-called window-dressing -- selling stocks with
large losses and buying those with strong gains to boost
portfolio performance -- ahead of the end of the quarter next
week, this was not the only reason for its rises this week.
"It's mainly macroeconomic fundamentals -- the road ahead for
the economy appears to be pretty bright."
The Nikkei has gained roughly 12 percent this quarter after
posting an 8.5 percent loss in the January-March quarter.
SUZUKI RACES AHEAD
Suzuki surged 5.5 percent to 2,195 yen. A Suzuki spokesman
said he could not comment on the reported tie-up with Volkswagen
because he had not heard of talks about any such deal.
[]
Nippon Oil climbed 4.2 percent to 576 yen after the Yomiuri
newspaper said it, oil and gas field developer Inpex <1605.T> and
plant engineering firm JGC Corp <1963.T>, were likely to win the
contract.
Iraq's Oil Minister Hussain al-Shahristani said on Thursday
that the Oil Ministry has selected a company to develop the
Nassiriya oilfield and has sent its choice to the cabinet for
approval, but he declined to identify the company.
Inpex rose 1.9 percent to 755,000 yen and JGC rose 2.3
percent to 1,571 yen.
Pioneer Corp <6773.T> jumped 10 percent to 296 yen after
J.P.Morgan raised its investment rating on the loss-making
electronics maker to "neutral" from "underweight", citing
progress in restructuring and improving domestic demand for car
navigation systems.
"We think Pioneer is turning the corner both in terms of its
earnings and finances," J.P. Morgan analyst Yoshiharu Izumi said
in a note to clients.
Lawson Inc <2651.T> rose 2.4 percent to 4,260 yen after the
Nikkei business daily reported that the convenience store chain's
group recurring profit likely rose 3 percent from a year earlier
to about 12 billion yen for the March-May quarter.
Trade was thin, with 938 million shares changing hands on the
Tokyo Exchange's first section, compared to last week's morning
average of 1.25 billion.
Advancing shares outnumbered declining shares by 986 to 556.
(Reporting by Elaine Lies; Editing by Edwina Gibbs)
