TOKYO, Sept 15 (Reuters) - Japan's Nikkei stock average is set to rebound on Tuesday, buoyed by gains on Wall Street and a halt in the yen's rise against the dollar that will lift exporters, but gains are likely to be limited by worries about the yen's strength.
NEC Corp will take over the cellphone operations at Casio Computer Co and Hitachi Ltd as the struggling sector bands together to cut costs and survive a fast-shrinking market.
Wall Street gained on investor confidence after reports of more merger activity suggested investors still see value in the market even after its rise of more than 50 percent since March.
"There's likely to be a small rebound in Tokyo shares after the U.S. gained and with the yen's rise against the dollar stopped for now," said Yutaka Miura, senior technical analyst at Mizuho Securities.
"But a lot of investors are reluctant to trade actively since the coming weekend is a five-day holiday." The market will also closely watching the dollar's moves against the yen, with further falls possibly sending the Nikkei into negative territory. The greenback was basically flat against the yen at 90.86 in early trade.
Little reaction was expected to Wednesday's change of government in Japan, when Yukio Hatoyama will take office after his Democratic Party's huge election win over the long-dominant Liberal Democratic Party (LDP).
The Nikkei business daily said on Tuesday that Hatoyama has decided to appoint veteran lawmaker Hirohisa Fujii as finance minister, with the market also likely to shrug off Hatoyama's assumption of power on Wednesday.
"There really are no surprises in what we're seeing for a possible cabinet," Miura added.
The benchmark Nikkei is likely to move between 10,150 to 10,400, market players said. It closed at 10,202.06 on Monday.
In a sign the market is likely to rise, Nikkei futures traded in Chicago closed at 10,330, up 1.5 percent from the Osaka close. STOCKS TO WATCH
-- NTT DoCoMo
NTT DoCoMo plans to sell its entire stake in Malaysian cell phone company U Mobile Sdn Bhd this month for $100 million, due to a difference of opinion with other shareholders over management, the Nikkei business daily said.
-- Japan Airlines
Japan Airlines plans to stop a further 20 or so international flights through the 2011 business year to cut costs, the Nikkei business daily said on Tuesday.
-- Canon Inc
Canon said on Monday it will start providing its latest multi-functional printer models to Hewlett-Packard later this year, broadening its business ties with HP from the supply of laser beam printers.
-- Matsumotokiyoshi Holdings
Japan's largest drug store chain said on Monday it plans to add 200-300 billion yen ($2.2-$3.3 billion) in annual revenue by acquiring smaller rivals by the end of the next financial year.
That would be an up to 75 percent jump in the firm's sales, which it forecast would likely be 400 billion yen for the year ending in March 2010, up 2 percent from the previous year.
-- Sumitomo Metal Mining Co Ltd
Sumitomo Metal Mining, a copper and nickel producer, said it would start commercial production of nickel at its Taganito plant in the Philippines in August 2013, a year later than planned.
The company had initially expected to start operations at the 30,000 tonne-a-year nickel plant in 2012. (Reporting by Elaine Lies; Editing by Joseph Radford)