Tokyo shares outlook: Lower in cautious trade ahead of FOMC meeting

TOKYO (AFX-ASIA) - Share prices are expected to open lower due to growing investor caution ahead of the FOMC meeting later today, dealers said.

	    The emerging view is that a rate cut by the U.S. Fed will be smaller than previously expected due to the recent encouraging economic data, they said.

	    Yesterday, the Nikkei 225 index closed down 170.90 points at 13,873.02.

	    In Chicago Friday, the Nikkei June futures contract finished at 13,780, compared with a closing level of 13,900 in Osaka.

	    The bearish performance of U.S. high-techs on NASDAQ overnight will also weigh on investor sentiment, with the ADRs of Japanese blue-chips, such as Sony, TDK and Toyota all finishing weakly overnight on Wall Street, dealers said.

	    Some nervousness will also continue ahead of the announcement Saturday of the rebalancing of free float stocks by Morgan Stanley Capital International, they said.

	    The market may see some downside support from bargain-hunters, but any buying will be unable to bolster the broader market, they said.

	    Murata, Toray and Denso will report their year to March 2001 earnings results today.

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