Nikkei set to slip on strong yen, bailout fears

TOKYO, Dec 12 - Japan's Nikkei average is set to slip on Friday on dimming prospects for a U.S. automaker bailout, while a sharply stronger yen is set to drag exporters such as Canon Inc lower.

One stock to watch will be Elpida Memory Inc, which said on Thursday it will redeem all or part of a $540 million convertible bond that has weighed heavily on its share price, a move that may pressure it to seek alternative financing to stay competitive.

Negotiations on a possible compromise with Senate Republicans over the auto bailout moved forward, with the prospects of a vote later in the day. But Republicans appeared to have more than enough votes to stop the bailout with a procedural roadblock

"Everyone is waiting for some sort of decision on this. Investors will move to lock in profits and the strong yen could lead to exporter selling," said Yumi Nishimura, deputy general manager at the investment advisory section of Daiwa Securities SMBC.

The dollar slipped to a seven-week low against the yen on Thursday. It was fetching around 91.47 yen in early Asian trade.

But falls were likely to be limited by bargain-hunting should the Nikkei slip below the psychologically important level of 8,500, although some market players said a drop below 8,000 was not impossible should the auto bailout fail.

The benchmark Nikkei is likely to move between 8,400 and 8,700. It ended Thursday trade at 8,720.55 after four straight days of gains that saw it rise 10 percent.

Nikkei futures traded in Chicago closed at 8,450, below the Osaka close of 8,680. > Wall St hurt by auto bailout anxiety, financials > Dollar slides to seven-week lows vs euro, yen > Downbeat data, weak stocks give bonds new life > Gold rallies, surpasses platinum as dollar drops > Oil rises 10 pct, OPEC calls for "severe" cut

STOCKS TO WATCH

-- Elpida Memory Inc

Elpida said on Thursday it would redeem all or part of a $540 million convertible bond that had weighed heavily on its stock price, a move that may pressure it to seek alternative financing to stay competitive.

Elpida, the world's third-biggest maker of dynamic random-access memory,raised 50 billion yen through the bond issued to Nomura Holdings last month but agreed to pay the money back if its share price stayed below 509 yen for 20 straight days. Its shares, hit by fears of massive dilution from the bond, did that, ending down 8.9 percent at 420 yen on Thursday.

-- Nippon Oil Corp

Nippon Oil, Japan's top refiner, said on Thursday it would shut its sole naphtha cracker in eastern Japan for about 20 days from late December, in line with a seasonal decline in ethylene demand.

The firm's Kawasaki naphtha cracker, with capacity to produce 404,000 tonnes of ethylene per year, is scheduled to be shut down until early January, a company spokesman said.

-- Kenedix Inc

Real estate fund operator Kenedix said on Thursday it now expects a 7.5 billion yen consolidated net loss for the year ending Dec. 31 instead of the 12.5 billion yen profit it had forecast.