Japanese stocks are expected to rise this week, with investors seeking retailers and other domestic-demand shares following increasing signs that an economic upturn is finally filtering down to the domestic sector.
The data earlier this month showed Japan's economy grew at its fastest pace in 13 years in the October-December quarter thanks to strong demand for Japanese electronics, cars and steel in China and the United States.
Last week's solid industrial output data added to evidence that the world's second-biggest economy is pulling out of a decade of stagnation.
Additional data showed that average spending by wage-earner households rose for a third month in January, suggesting a recovery may also be taking hold in personal consumption, the largest but weakest part of Japan's economy.
Given that, analysts said, it looks more lucrative to buy stocks dependent on domestic demand than those of exporters, whose earnings prospects could be hurt by external shocks.
One such problem has been volatility in currencies.
Others are cautious, noting the possibility of further falls in US high-tech stocks and risk of a strengthening yen if key US economic data, such as the Institute for Supply Management's report on its manufacturing index on Monday, fall short of expectations.
Thursday brings US weekly initial jobless claims, followed by the more detailed February employment report on Friday.
On Tuesday last week, the Nikkei suffered its biggest percentage loss since December, led by falls in exporter shares after a sudden rise in the yen toward 108 to the dollar.
A high yen is widely viewed as a negative for Japanese exporters by lowering dollar-based export returns and making their products less price competitive.
Mid-quarter business update by US tech bellwether Intel Corp, scheduled on Thursday, is also carefully watched as that could set a near-term direction of the Nasdaq and their Japanese counterparts, such as chip-making equipment maker Tokyo Electron Ltd, analysts said.
On Friday, the Nasdaq finished down 0.14 percent at 2,029.82, wrapping up its sixth straight week of losses. The blue chip Dow was up 0.04 percent at 10,583.92.
Last week, gains in builders, retailers and other domestic demand-led issues helped lift the Nikkei three percent to 11,041.92, above 11,000 for the first time since January 23.
It was a third week of gains and the biggest weekly rise since the week ended on October 3, when it put on 3.79 percent.
The Nikkei is widely expected to hold its ground in March, when selling by banks and other domestic institutions, which traditionally unload stocks at this time of year to realise profits before end-March book closings, peters out.