Tokyo shares expected to track US inflation

Japanese share prices are expected to track US inflation and housing data next week in hopes of clues on the outlook of US interest rates, analysts said Friday.
The market will also be on guard for possible repercussions if Prime Minister Junichiro Koizumi goes as expected to a controversial war shrine.
For the week ended August 11, the Tokyo Stock Exchange's benchmark Nikkei-225 index rose 65.84 points or 0.42 percent to close at 15,565.02. The broader TOPIX index of all first-section stocks gained 6.22 percent or 0.40 percent to close at 1,577.92.
The market had a topsy-turvy week, with share prices hitting a two-month high Wednesday on soaring June machinery orders but slipping Friday on weaker than expected gross domestic product figures.
Economic growth slowed to 0.2 percent in the quarter to June due largely to a slowdown in US demand for Japanese exports despite robust domestic consumption.
"Steady capital investment and consumption are expected to support domestic shares but the weak headline of the data may dampen foreign investors' sentiment," said Kazuhiro Takahashi, equity general manager at Daiwa Securities SMBC.
Investors will pay close attention to US data next week including the producer price index, consumer price index and housing data for July. "The US economic indicators will show the conditions of the US economy. The market will track those indicators to see the outlook of US monetary policy," Takahashi said.
The US Federal Reserve Tuesday decided to pause its two-year rate hike cycle but the market believed the halt was only temporary.
Investors will also be watching earnings of leading US high-tech companies earnings including Hewlett-Packard and Dell Computer, Takahashi said.
"There is some political risk about the prime minister's possible visit to the Yasukuni shrine on August 15, which would set up neighbouring Asian countries' protests. But even so, the negative impact will be limited as he steps down September," he added.
Koizumi has hinted he plans to visit to the Yasukuni shrine, which honours 2.5 million war dead along with 14 top war criminals from World War II, on the anniversary of the end of Japan's surrender.
His repeated visits to the shrine infuriated China and South Korea which have refused to hold summits with him.
Masayoshi Yano, senior market information manager at Tokai Tokyo Securities, said the market could move in narrow ranges because of Japan's O-bon holiday, when many investors go on vacation. Takahashi forecast the Nikkei key index may rise to 16,000 points barring risk factors.