* Nikkei dips in and out of positive territory; trade light
* Correlation between yen, stocks seen stronger - analyst
* Eyes also on Chinese stocks
By Aiko Hayashi
TOKYO, Sept 1 (Reuters) - Japan's Nikkei average danced in
and out of positive territory on Tuesday with market players
saying that moves in dollar/yen were largely driving the market,
while investors were also keeping an eye on Chinese stocks.
Some market players said that they believed that the
correlation between moves in currency markets and Tokyo stocks
had grown stronger after Sunday's election victory for the
Democrats as some party officials have said Japan should start
thinking of a strong yen as in its interest. []
The yen gained on Monday, helping to push the Nikkei lower.
"The yen moves are driving the market. Auto trading
programmes linking the dollar/yen moves and the Nikkei have
likely set in," said Fumiyuki Nakanishi, manager at SMBC Friend
Securities.
Sunday's landslide victory for Yukio Hatoyama's opposition
Democrats ends a half-century of almost unbroken rule by the
Liberal Democratic Party in Japan and breaks a deadlock in
parliament. []
"But all of that is happening when the market entered a
natural corrective phase, with the Nikkei having gained nearly 50
percent from its March lows. It's not as if the view on a
recovery for the global economy had changed," Nakanishi said.
In light trade, the benchmark Nikkei <> was up 0.5
percent or 48.08 points at 10,540.61.
It fell 0.4 percent on Monday, hitting an 11-month high at
10,767.00 at one stage as the market struggled to interpret the
results of Sunday's election.
The broader Topix <> added 0.3 percent to 968.44.
In Asian trade, the dollar was largely flat at around 93 yen
<JPY=>. Investors fret about a stronger yen as it curbs
exporters' profits when they are repatriated.
"Moves in the Chinese stock market are also in focus as
demand from the country has supported exports on which Japan has
been heavily depended for growth," said Takahiko Murai, general
manager of equities at Nozomi Securities.
"But as a whole, there's no clear direction for fund flows at
the moment."
China shares <> edged up on Tuesday after diving 6.7
percent the previous day, when surging stock valuations
overwhelmed improvements in corporate earnings. That spooked
investors globally and helped sent the S&P 500 Index <.SPX> down
0.8 percent. []
TCM CORP SOARS, TRADING FIRMS FALL
Big gainers in Tokyo included TCM Corp <6374.T>, which
rocketed 33.6 percent to 187 yen after excavator maker Hitachi
Construction Machinery Co <6305.T> said on Monday it would make
the forklift maker a wholly owned subsidiary through a share
swap. []
Hitachi Construction rose 1.1 percent to 1,909 yen.
Among exporters, Advantest Corp <6857.T> climbed 1.9 percent
to 2,365 yen and Kyocera Corp <6971.T> added 0.7 percent to 7,800
yen.
But Mitsubishi Corp <8058.T> and other trading houses lost
ground after oil extended losses further below $70 a barrel, a
day after sliding almost 4 percent as worries about the global
economy's health grew after a plunge in Chinese equities. []
Mitsubishi, Japan's largest trading house, shed 0.9 percent
to 1,869 yen and fellow trading house Mitsui & Co <8031.T> fell
0.8 percent to 1,202 yen.
Yoshinoya Holdings Co <9861.T>, which runs a chain of
beef-on-rice bowl shops, dropped 2.6 percent to 111,000 yen after
the Nikkei business daily said the company's operating profit for
the March-August period was likely to be flat against previous
estimates for profit of 1.4 billion yen.
Some 849 million shares changed hands on the Tokyo exchange's
first section, below last week's morning average of 908 million.
Advancing shares outnumbered declining ones, 806 to 672.
(Reporting by Aiko Hayashi; Editing by Edwina Gibbs)
