Pre-opening buy orders exceeded sell orders for the first time in seven days.

"There is still uncertainty about external developments including the fallout from the credit crisis," said Yumi Nishimura, deputy general manager for equity marketing at Daiwa Securities SMBC.

Investors are also exercising caution ahead of Japan's Tankan report tomorrow and key U.S. data this week including non-farm payrolls.

The Nikkei 225 Stock Average ended the morning up 45.04 points or 0.3 percent at 13,589.40, off a high 13,598.48.

The broader Topix rose 8.92 points or 0.7 percent to 1,329.60.

Gainers outnumbered decliners 961 to 637, with 122 issues unchanged.

Volume declined to 772 million shares from 910 million shares on Friday morning.

Commodity related issues were firmer after crude oil rose to a new record of $142.99 a barrel in New York on Friday.

Trading house Mitsubishi Corp. rose 3.2 percent to 3,500 yen, major oil refiner Nippon Oil gained 6.3 percent to 706 yen, while oil and gas field developer Inpex Holdings advanced 3.9 percent to 1.33 million yen.

Investors also snapped up defensive stocks. Utility firm Tokyo Electric Power rallied 4.2 percent to 2,740 yen, JR East Railway rose 1.9 percent to 861,000 yen, Japan Tobacco gained 1.8 percent to 451,000 yen.

But some exporters lost ground on profit taking as the yen firmed against the dollar. Sony shed 2.5 percent to 4,720 yen. Construction machinery maker Komatsu fell 0.8 percent to 2,985 yen and game consoler maker Nintendo lost 1.8 percent to 59,900 yen.

Takashimaya Co declined 1.5 percent to 961 yen after the department store operator reported on Friday its first-quarter operating profit fell 8 percent due to sluggish consumer spending.

Orix Corp gained 0.5 percent at 15,470 yen after the Nikkei newspaper reported that Japan's largest leasing company will invest a total of 300 billion yen this year in office buildings and condominiums in Tokyo, Osaka and Nagoya, to take advantage of recent falls in property prices.

Asahi Breweries Ltd added 0.2 percent to 1.977 yen on a report that the brewer is expected to post operating profit of about 24.5 billion yen for the fiscal half ending June 30.

($1 = 106.39 yen)

masami.hachisu@thomsonreuters.com

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Why buy this report

- Get insight into trends in market performance

- Pinpoint growth sectors and identify factors driving change

- Identify market and brand leaders and understand the competitive environment

Product coverage

- Dark beer

- Lager by origin

- Lager by price platform

- Low/non-alcohol beer

- Stout

Key Topics Covered:

-EXECUTIVE SUMMARY

-KEY TRENDS AND DEVELOPMENTS

-MARKET BACKGROUND

-TAXATION AND DUTY LEVIES

-OPERATING ENVIRONMENT

-MARKET INDICATORS

-MARKET DATA

-DEFINITIONS

-LOCAL COMPANY PROFILES - JAPAN

-ASAHI BREWERIES LTD - ALCOHOLIC DRINKS - JAPAN

-CALPIS CO LTD - ALCOHOLIC DRINKS - JAPAN

-CHOYA UMESHU CO LTD - ALCOHOLIC DRINKS - JAPAN

-HAKUTSURU SAKE BREWING CO LTD - ALCOHOLIC DRINKS - JAPAN

-KIRIN BREWERY CO LTD - ALCOHOLIC DRINKS - JAPAN

-MEIDI-YA CO LTD - ALCOHOLIC DRINKS - JAPAN

-MERCIAN CORP - ALCOHOLIC DRINKS - JAPAN

-SAPPORO BREWERIES LTD - ALCOHOLIC DRINKS - JAPAN

-SUNTORY LTD - ALCOHOLIC DRINKS - JAPAN

-TAKARA SHUZO CO LTD - ALCOHOLIC DRINKS - JAPAN

-BEER IN JAPAN

-HEADLINES

-TRENDS

-PRODUCTION, IMPORTS AND EXPORTS

-COMPETITIVE LANDSCAPE

-PROSPECTS

-SECTOR BACKGROUND

-SECTOR DATA

Companies Mentioned:

- Asahi Breweries Ltd

- Calpis Co Ltd

- Choya Umeshu Co Ltd

- Hakutsuru Sake Brewing Co Ltd

- Kirin Brewery Co Ltd

- Meidi-Ya Co Ltd

- Mercian Corp

- Sapporo Breweries Ltd

- Suntory Ltd

- Takara Shuzo Co Ltd

For more information visit http://www.researchandmarkets.com/research/aed082/beer_in_japan

Source: Euromonitor International

SOURCE: Research and Markets Ltd.

Research and Markets
Laura Wood, Senior Manager
press@researchandmarkets.com
Fax from USA: 646-607-1907
Fax from rest of the world: +353-1-481-1716

Japan is one of the most challenging food and drink, as well as retail, markets for foreign companies. While food and beverage consumption is high, buoyed by consumers with extremely strong purchasing power, interest in innovative products and responsiveness to marketing, the sector is mature and saturated, offering little in terms of long-term growth potential. In BMI's Food and Drink Business Environment Ratings, Japan is placed joint fourth (alongside Thailand) in the table ranking 14 key markets in the Asia Pacific region. The country seen as offering fewer opportunities than the other mature markets, such as Australia and South Korea, while its substantial economic clout clearly provides room for companies already operating in the country, albeit in the shorter term.

Overall, Japanese food and drink market can be viewed as a double-edged sword: on the one hand, its large and wealthy population is extremely receptive to innovation, but - on the other - companies investing in the country must accept steady and unspectacular annual growth. More recently, the situation has been further complicated by rising commodity prices, which have eventually been passed onto consumers by both food and drink producers, and - more reluctantly - by retailers, which had previously attempted to absorb the rising costs themselves. The net result should be higher value, but lower volume sales, which will tend to cancel each other out in the short term, until some companies succeed in offering alternative retail formats and food and beverage products.

In terms of individual segments, alcoholic beverages have been recording a slide over the past few years. In response to the toughening of the operating environment, major brewers are attempting to boost their involvement in other segments, as well as regions. To this end, in December 2007, Kirin and Suntory breweries unveiled new products in their domestic happoshu (carbohydrate-free versions of the quasi-beer drink) portfolios, with Asahi already marketing s a carbohydrate-free beverage Style Free happoshu brand. Sapporo followed suit with the launch a new low-carbohydrate beer at the end of February 2008. Around the same time, Asahi and compatriot trading house Marubeni Corp formed a wine-making joint venture in China, in partnership with Chinese brewer DaFuHao Beer Co, targeting a fledgling, yet enormously high-growth market.

In the meantime, according to the figures jointly released by the country's five major brewers Japanese beer shipments fell in 2007 - for the third year running, reaching the lowest levels since 1992, when the brewers started collating such data. However, the recent fuel price rises resulted in the higher cost of beer, leading to the January 2008 11.9% increase in the sales of beer and beer-like drink. This development will further push consumers towards alternative beverages, which have already gained popularity due to increased health-consciousness, although some brewers are aiming to protect themselves from soaring commodity prices. For example, Kirin is partnering Australian Lion Nathan to purchase raw materials, having successfully trialed the scheme in the course of 2007.

Key Topics Covered:

- Business Environment

- Regional Food & Drink Business Environment Ratings

- SWOT Analysis

- Macroeconomic Outlook

- Industry Forecast Scenario

- Industry Developments

- Regional Overview

- Agriculture

- Tobacco

- Competitive Landscape

- Company Analysis

- BMI Forecast Modelling

Companies Mentioned:

- Seven & I Holdings

- Lawson Inc

- AEON

- Seiyu

- Ajinomoto

- Kirin

- Asahi Breweries Ltd

For more information visit http://www.researchandmarkets.com/research/11648a/japan_food_and_dri

SOURCE: Research and Markets

Research and Markets
Laura Wood
Senior Manager
press@researchandmarkets.com
Fax from USA: 646-607-1907
Fax from rest of the world: +353-1-481-1716

"The tax rebates are temporarily boosting sales. It won't last, but it will boost rate hike fever," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Nozomi Securities market analyst Akihiro Shiroeda said whether rising inflation stemming from surging crude oil prices will change the course of monetary policy in the United States and whether the U.S. economy can survive a rate hike are likely to be the key topics of the market.

"But on the other hand, rising crude oil prices, since they can increase the purchasing power among resource-rich nations, may boost investments in Japan from these nations," he said.

Light, sweet crude rose 36 cents to settle at $136.74 a barrel on the New York Mercantile Exchange.

The Nikkei business daily reported without citing sources that Mubadala Development Co., an investment arm of the Abu Dhabi government, will invest about 10 billion yen ($92.6 million) in a hospital that will open in Kobe to offer advanced medical care.

Meanwhile, a further weakening of the yen will support Japanese exporters by eliminating fears about their profits.

On Wall Street on Thursday, the Dow closed up 57.81 points or 0.5 percent at 12,141.58, while the Nasdaq rose 10.34 points or 0.4 percent to 2,404.35.

The Chicago-traded Nikkei futures contract was at 13,940 points in late trading, down slightly from 14,000 points on the Osaka Securities Exchange on Thursday.

On the Tokyo bourse on Thursday, the benchmark Nikkei 225 Stock Average dropped 294.88 points or 2.1 percent to 13,888.60, off a low of 13,826.07 but at its lowest closing level since May 28 when the index finished at 13,709.44. The broader Topix index fell 26.89 points or 1.9 percent to 1,363.14.

Ahead, the Bank of Japan (BoJ) will announce the outcome of a two-day policy board meeting, while the Japanese central bank will also release its monthly economic assessment. BoJ governor Masaaki Shirakawa will speak at a regular press conference after the close of the market.

The Ministry of Economy, Trade and Industry will release revised industrial output data for April and the Cabinet Office will release its consumer sentiment survey for May.

Stocks to watch include brewers Kirin Holdings Co Ltd and Asahi Breweries Ltd after Belgian brewer InBev SA offered late on Wednesday to buy Anheuser-Busch, the maker of Budweiser, Bud Light and other brands for $65 per share.

($1 = 107.94 yen)

yasuhiko.seki@thomsonreuters.com

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