With few market moving factors expected this week domestically, the Tokyo market will be taking marching orders from Wall Street, market watchers said. "It's just up to US stocks this week," said Keiko Kondo,a strategist at Merrill Lynch Japan. "Basically, investors are on the sidelines. And they will be watching the course of US stocks from there."

The Dow Jones industrial average ended 1.42 per cent down on Friday at 10,733.91 points on renewed jitters over interest rates, while the Nasdaq composite index jumped to a 2.30 per cent higher finish at 3,860.66.

Investors are increasingly concerned about US stocks asthe benchmark Nikkei average has become more susceptible to movements in US shares, high-tech stocks in particular, after its recent reshuffle, market players said. The business daily Nihon Keizai Shimbun, which operates the key average, replaced 30 component stocks on April 24. Most of the outgoing shares are traditional manufacturers, while many of the incomimg issues are high-tech "New Japan" stocks. The Nikkei average slipped 45.47 points or 0.25 per cent last Friday, closing below the 18,000 mark for the first time since November 2, 1999. On the week, it lost 1.53 per cent, following a 10.68 per cent slide the week before.

Brokers say it is unlikely to slide much further as the decline has little to do with Japan's economic fundamentals.

"The Nikkei's recent drop was mainly prompted by factors like the reshuffle in its component earlier this week, and volatility in US shares. Investors' positive outlook on the Japanese economy has not changed a bit," said Hiroichi Nishi, a deputy general manager at Nikko Securities.

Traders see the Nikkei average moving at around the 18,000 mark this week.High-tech firms with healthy earnings and solid outlooks such as chip makers and manufacturers of chip-making equipment are likely to attract buying interest, traders said.

"High-tech firms with brisk earnings would be the centre of investor attention, especially because we are right in the middle of earnings season," said Masatoshi Sato, an equities manager at Kankaku Securities. He said firms like Murata Manufacturing Co Ltd and Rohm Co Ltd are expected to be chased higher. Murata is a major manufacturer of ceramic capacitors and Rohm is a leading custom chipmaker. Murata rose 2.19 per cent to 21,000 yen on Friday, and Rohm gained 7.42 per cent to 36,200 yen. Shares in Advantest Corp, which is famous for semiconductor testing devices, and Tokyo Seimitsu Co Ltd, a top maker of semiconductor-manufacturing systems, would also be bought up in the coming sessions, traders said.