Tokyo stocks are likely to hold recent gains this week, underpinned by strong corporate earnings and expectations that US and Japanese share markets will remain unfazed by record crude oil prices.
US jobs data on Friday was softer than consensus expectations, dragging the Dow and the tech-laden Nasdaq lower, but while that may prompt a slow start for the Tokyo market, several players said they anticipate last week's healthy sentiment to continue.
"I'm looking for the market to keep testing the upside until late this month," said Tsuyoshi Segawa, equity strategist at Shinko Securities.
In a shortened week, with Tokyo's financial markets closed on Monday for the Health and Sports Day national holiday, investors will focus on Japan's biggest trading partner as the US corporate earnings season moves into top gear.
There will be keen interest in comments from tech bellwether Intel Corp, which reports third-quarter earnings on Tuesday.
Other big names due to report this week include Yahoo Inc and Apple Computer Inc as well as Bank of America Corp and Citigroup Inc.
In Tokyo, there will be a slew of retailer earnings, including first-half results from Lawson Inc, Japan's second-largest convenience store operator, and full-year numbers from Uniqlo-brand casual wear Fast Retailing Co Ltd.
Also in the spotlight will be debt-laden Daiei Inc, the subject of interest from a number of investors, including Wal-Mart Stores Inc, the world's number one retailer. Daiei has been given a Tuesday deadline to decide if it will seek aid from a state-backed body.
Its main bank UFJ Holdings Inc and other creditors want to turn Daiei over to the state-backed Industrial Revitalisation Corp (IRCJ) of Japan, but the retailer has so far refused, saying it can turn itself around.
Daiei reports its first-half earnings on Friday. Analysts and investors said they expect Japan's benchmark Nikkei index to trade between 11,200 and 11,600.
The Nikkei rose 3.3 percent last week to 11,349.35 as upward revisions in earnings estimates from a number of companies followed a strong rise in the central bank's quarterly corporate sentiment survey the week before.
But much of the Nikkei's rally came on the back of energy and resource companies tracking crude oil's record rise to above $53 a barrel, and many market participants said they are looking for signs of when to buy techs again.
"Much of the bad news about the tech sector has already been priced in and as long as we don't see something like a big downward revision, I think people will be looking for opportunities to buy back," said Shinko Securities' Segawa.