TOKYO, Sept 29 (Reuters) - Japan's Nikkei average is likely to rebound on Tuesday after the yen pulled back from an eight-month high against the dollar and U.S. stocks snapped a three-day losing streak helped by a spurt in corporate takeovers.
On Monday, the dollar dropped to as low as 88.23 yen after Japan's finance minister stoked speculation the new government was unlikely to intervene to weaken its currency, hitting shares of exporters and sending the Nikkei average to a two-month closing low.
"The market will likely rebound and then be mixed as the yen's advance against the dollar is halting and the Nikkei has already declined 5.1 percent since a recent high hit last week," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.
"Investors may pick up shares that had been sold off such as exporters, but currency moves and comments by government officials continue to be in focus."
Square Enix Holdings Co Ltd may draw attention after it said it aims to double its recurring profit to 50 billion yen ($557.7 million) in three to five years by expanding its range of game titles and strengthening its overseas operations.
Nikkei futures traded in Chicago ended Monday at 10,245, up 2.1 percent from the Osaka close, pointing to a higher start.
The benchmark Nikkei is likely to move between 10,050 and 10,250 on Tuesday, market participants said. It slid 2.5 percent the previous day to end at 10,009.52, its lowest close since July 24. It also hit a two-month intraday low of 9,971.05.
The dollar was trading around 89.65 yen in early Asia trade as the yen has surrendered gains as the finance minister said it was wrong to see his comments as a license to push the currency higher.
The impact of a stronger yen on earnings of exporter companies is a concern for market players as a stronger Japanese currency eats into exporters' profits when they are repatriated.
The Standard & Poor's 500 Index gained 1.8 percent on Monday as a spurt in corporate takeovers in the technology and healthcare sectors fueled optimism about share values.
Xerox Corp agreed to buy Affiliated Computer Services Inc, and Abbott Laboratories said it would pay $6.6 billion for Solvay's drug unit. STOCKS TO WATCH
-- Toshiba Corp
Toshiba, Japan's largest chipmaker, will scale back research and development at its semiconductor segment, as well as the wider electronic device business, the Nikkei business daily reported.
-- Toyota Motor Corp
Toyota plans to consolidate purchases of resin materials among group firms to cut costs and strengthen its bargaining power, the Nikkei business daily reported.
-- Pioneer Corp and Sharp Corp
Consumer electronics makers Pioneer Corp and Sharp Corp said on Monday that they would delay the merger of their optical disc operations as anti-trust reviews continue overseas. (Reporting by Aiko Hayashi; Editing by Joseph Radford)