Recall-hit Toyota Motor Corp may in be focus after a July 2009 company document showed it was aware of sudden acceleration complaints. Insurer State Farm also said it notified regulators of concerns about a trend in accidents involving Toyota cars more than three years earlier than previously thought.
Takeda Pharmaceutical may benefit after safety reviewers recommended GlaxoSmithKLine PLC's diabetes drug Avandia be pulled from the market after concluding it is more dangerous to the heart than Takeda's Actos.
'After the Nikkei fell sharply on Friday, gains on Wall Street and a slight trend towards a weaker yen will reassure investors, making it easy for short-covering to emerge,' said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.
'But concerns about Shanghai shares, what (Fed Chairman Ben) Bernanke says to Congress later this week, and the Toyota president's testimony to U.S. lawmakers will all weigh on the market, leaving it vulnerable to profit-taking.'
The Shanghai stock market reopens after a week-long Lunar New Year holiday.
Global markets were rattled after China raised its bank reserve requirement on Feb 12, sparking worries that monetary tightening in the world's third-largest economy would be more aggressive than thought and potentially damage global growth.
The Dow Jones industrial average ended last week 3 percent higher and the S&P 500 M.SPC> 3.1 percent higher, the best performance for the two gauges since late November. The Nasdaq gained 2.8 percent, its best weekly showing since late November.
But on Friday all barely edged higher, though this will still help buoy Japanese shares.
The latest U.S. inflation data, which showed consumer prices rose less than expected in January, edging up 0.2 percent, seemed to support the view that the Fed is not facing urgent pressure to raise its benchmark fed funds rate, which stands near zero and has helped fuel a broad advance in stocks.
Nikkei futures traded in Chicago closed at 10,285, up 1.4 percent from the Osaka close.
The Nikkei lost 2.1 percent on Friday, with resource-linked shares hit hard after the discount rate hike sent commodities prices lower. Market players said it would trade between 10,100 and 10,300 on Monday.
----------------------MARKET SNAPSHOT @ 2246 GMT ------------
INSTRUMENT LAST PCT CHG NET CHG S&P 500 1109.17 0.22% 2.420 USD/JPY 91.61 0.15% 0.140
10-YR US TSY YLD 3.7764 -
0.000 SPOT GOLD 1117.5 0.00% 0.000 US CRUDE 79.81 0.00% 0.750 DOW JONES 10402.35 0.09% 9.45
> Wall St edges up but rate worries linger > Dollar climbs after Fed discount rate hike > Bonds turn positive, rate-hike anxiety eases > Gold up as investors seek refuge in the bullion > Oil rises toward $80 on refinery strikes, Iran
STOCKS TO WATCH
-- Nikon Corp
Nikon will likely beat its digital camera sales forecast for the financial year to March on strong demand in China and other parts of Asia, the head of its camera division said on Friday.
-- Bridgestone Corp
Bridgestone, Japan's largest tyremaker, reported a surge in quarterly profit after government incentives boosted car demand but forecast slower-than-expected growth this year as it faces high materials costs.
-- Honda Motor Co
Honda has taken a big step towards developing a new hybrid system for larger cars, its head of automobile research and development said on Friday, indicating a finished product could be about three years away.
(Reporting by Elaine Lies; Editing by Edwina Gibbs)
((elaine.lies@thomsonreuters.com; +81 3 6441 1807; Reuters Messaging:elaine.lies.reuters.com@reuters.net))
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