Earnings results from major US companies will sway the Tokyo stock market this week, but optimism over domestic economic recovery should prevent shares from falling far.
Japanese financial markets will be closed on Monday for Marine Day holiday and will reopen on Tuesday.
With Japan's quarterly earnings season not yet in a full swing this week and no major economic data on a timetable, investors will be focusing most closely on the earnings and business outlooks of such US firms as Texas Instruments Inc and Microsoft Corp.
An appearance by US Federal Reserve Chairman Alan Greenspan on July 20 is also on the market's radar screen.
"The market's main focus will be on the US earnings. That means we'll have volatile morning sessions and rather quiet hours in the afternoon," said Yutaka Miura, deputy manager of the equity information department at Shinko Securities.
Meanwhile, others said a batch of earnings from US tech firms might diminish buyers' appetite for local peers.
Traders said the Nikkei average would move between 11,000 and 11,600 this week after adding 0.15 percent in the previous week to end Friday's session at 11,436.00.
US stocks fell on Friday, hit by a sell-off in technology shares as investors' worries about slowing growth in the economy and corporate profits overshadowed upbeat earnings from tech bellwether IBM.
Japan's major technology giants, including Sony Corp, Advantest Corp and Canon Inc, are set to post first-quarter business results in the week of July 26.
Optimism is high that some of them will revise upward their annual earnings projections when they unveil first-quarter results, as their original full-year estimates are widely viewed as too conservative.
Still, many analysts said they are not about to recommend tech stocks until they actually hear what these companies will say about their business for quarters ahead.
Technology stocks suffered from sharp losses last week, with chip-making-equipment supplier Tokyo Electron Ltd losing 4.4 percent after Merrill Lynch's downgrade on the chip sector followed by a disappointing forecast by bellwether Intel Corp.
Banks are also likely grab attention this week after Mitsubishi Tokyo Financial Group (MTFG) said on Friday it would work towards a take-over of rival UFJ Holdings in a deal that would create the world's biggest banking group and should bolster financial reform in Japan.
The merger is widely seen as a rescue by the financially stronger MTFG of its struggling peer. MTFG said it was considering a capital injection into UFJ, which analysts say has a pressing need for short-term funds.