Japanese share prices may take a breather next week as investors pocket profits after the recent rise to three-month highs, with economic indicators likely to be the main focus, dealers said Friday.
They said investors will also keep a close watch on Chinese share prices after the recent slump there, although so far other global markets appear to have been largely unaffected.
For the week to June 1, the Tokyo Stock Exchange's Nikkei-225 index of leading shares gained 477.67 points or 2.73 percent to close Friday at 17,958.88, its highest closing level since February 27.
The index briefly crossed the symbolic 18,000-point level during the day but failed to hold above the key threshold.
The broader Topix index of all first-section shares advanced 52.34 points or 3.05 percent to 1,767.88.
The market may lack enough positive leads to vault decisively above 18,000 points next week, unless US and Japanese economic data surprise on the upside, dealers said.
"Share prices will hover around 18,000 (points), although it depends on the US jobs data," said Masatoshi Sato, strategist at Mizuho Investors Securities, referring to the monthly US pay-rolls which were due out late Friday.
"The market has factored in a slowing US economy, but the sense of vigilance over inflation is increasing, which could become a destabilising factor," he added.
Investors will comb through a survey of Japanese corporate capital expenditure due on Monday and next Friday's key machinery orders data for April, while keeping a close eye on overseas markets, dealers said.
"The current upward trend in Japanese shares is supported by the cool-headed reaction in the US market to the plunge in the Chinese stock market, but few other positive factors are available," said Sato.
Chinese share prices fell sharply this week after a hike in taxes on share transactions, the government's latest effort to curb the nation's booming stock markets.
But the regional response was not nearly as strong as when the Shanghai bourse tumbled nearly 9.0 percent in one day in February on rumours the government would introduce a capital gains tax on stocks.
Toyo Securities strategist Hiroaki Hiwata said that investors will be watching developments at next week's meeting of the Group of Eight industrialised nations where the environment will be one topic on the agenda.
Depending on the outcome of the meeting, "companies related to nuclear power generation and water treatment may gain," Hiwata said.