Japan stocks may lose ground, Toyota in focus

TOKYO (Reuters) - Japanese stocks may lose some ground on Friday on a bleak outlook for the economy, with trading likely to be volatile on the settlement of index options and how investors digest Toyota Motor Co's (7203.T: Quote, Profile, Research) quarterly results.

"Today's biggest topic is Toyota. Its share price has already factored in a tough situation, but let's see how the market reacts to its results," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

The world's biggest automaker posted a 28 percent drop in quarterly net profit, dented by a strong yen and slumping U.S. sales, and kept its forecasts unchanged for what is set to be its most challenging year in recent memory.

The settlement of index options comes at the opening, and is often seen as a volatile factor for the market.

The Japanese government cut its view on the economy on Thursday, dropping the word "recovery" for the first time in nearly five years, as high raw material costs and a global slowdown push the world's No.2 economy towards a recession.

The benchmark Nikkei .N225 is expected to move between 12,850 and 13,100.

Nikkei futures traded in Chicago 2NKc1 closed at 13,070, down 60 points from the Osaka close JNIc1.