Nikkei set to rise but gains limited, eyes on yen

TOKYO (Reuters) - Japan's Nikkei average is expected to gain on Thursday, buoyed by stocks reliant on domestic demand in the face of rising worries about the global economy, but advances may be limited by a stronger yen.

Two stocks to watch are Japan's top refiner Nippon Oil Corp (5001.T) and sixth-ranked Nippon Mining Holdings Inc (5016.T), which said they will hold board meetings on Thursday to consider a merger.

A combined company would help them better compete amid sliding prices and slower demand, and would create the world's eighth-largest oil major.

"There's still a lot of uncertainty out there, especially about the Big Three U.S. carmakers," said Yoku Ihara, a manager at the investment information department of Retela Crea Securities.

Committees in the U.S. Congress are scrutinizing auto company restructuring proposals and an urgent appeal for $34 billion in aid ahead of make-or-break hearings, which start on Thursday and will question the chief executives of General Motors Corp (GM.N), Ford Motor Co (F.N) and Chrysler LLC.

Market players said that if the dollar slides to the 92 yen level stocks may be pressured lower, led down by exporters such as Canon Inc (7751.T). The dollar on Wednesday briefly touched 92.55 and was trading at 93.33 yen in early Asian trade.

The benchmark Nikkei .N225 is expected to move between 7,900 and 8,200. It finished Wednesday at 8,004.10.

Nikkei futures traded in Chicago closed at 8,175 compared to the Osaka close of 8,040.

Wall St jumps on Coke and other defensive plays .N > Dollar little changed; ECB, BOE rate meetings ahead. Prices rise on weak business, employment data. Gold extends losses on firmer dollar, eyes data. Oil dips as demand crumbles, OPEC eyes deeper cuts.

STOCKS TO WATCH

Nippon Oil Corp (5001.T), Nippon Mining Holdings Inc (5016.T)

-- Japan's top refiner Nippon Oil and sixth-ranked Nippon Mining Holdings said they will hold board meetings on Thursday to consider a merger.

-- Panasonic Corp (6752.T), Sanyo Electric Co Ltd (6764.T)

Panasonic has raised its buyout offer for Sanyo by 10 yen to 130 yen per share in the hope of closing a deal this week, the Nikkei business daily reported on Thursday, without citing sources.

-- Softbank Corp (9984.T)

Softbank is in talks with regional units of Nippon Telegraph and Telephone Corp (9432.T) to become a sales agent for NTT's fibre-optic service, the Nikkei business daily said on Thursday.  Continued...