Nikkei strikes 3-week high; Fed euphoria lifts cyclicals

* Cyclicals gain as Fed stimulus steps boost risk appetite
* Hitachi rises after lifting H1 dividend
* Seven & i slips on concerns of weaker outlook
* Nikkei up 3.2 pct this week, 2nd week of gains

By Sophie Knight
TOKYO, Sept 14 (Reuters) - Japan's Nikkei average climbed
1.8 percent on Friday to its highest level in three weeks,
gaining a foothold above 9,000 after bold plans for stimulus
from the U.S. Federal Reserve boosted risk appetite and lifted
battered cyclical stocks.
Miners and metal producers, which have a relatively strong
correlation with the health of the global economy, rallied the
most. The mining sector jumped 5.8 percent and
non-ferrous metals rose 5 percent.
The Nikkei advanced 164.24 points to 9,159.39 in
heavy volume, helping to hoist the benchmark well clear of its
200-day moving average at 9,002.87.
A senior dealer at a foreign bank said buy orders were
outnumbering sell orders by a ratio of "between 2 and 2.5 to 1".
"A decent amount of flow, I would say ... not much hedge
fund money but long-only primarily," he said, but added that
currency moves, including the potential for intervention, remain
a key concern.
"Japan is going to continue to underperform so long as the
currency strengthens. The open question is whether the Bank of
Japan is going to step in and actually do something to the
currency," the trader said.
The first round of quantitative easing from the Fed helped
the Nikkei surge 23 percent in the subsequent three months, and
it climbed nearly 12 percent for the same period after the
second dose of stimulus.
But the yen is much higher now, hitting a seven-month high
of 77.13 yen against the dollar on Thursday. That compares with
a level of around 95 yen to the dollar in the three months after
the first QE and around 80-84 yen for the same period after the
second round.
Shares in exporters however shrugged off gains in the
currency on Friday, taking heart from improved appetite for risk
assets. Toyota Motor Corp climbed 1.4 percent and Canon
Inc added 3.6 percent.
The Nikkei closed 3.2 percent up on the week, its biggest
weekly gain in four weeks. For the year, it is up 8.3 percent,
underperforming a 16.1 percent gain in the U.S. S&P 500
and an 11.4 percent rise in the pan-European STOXX Europe 600
.
Some market participants were doubtful that the Fed's action
this time would be as effective as past efforts.
"I think it's wishful thinking to expect QE3 to
fundamentally improve the global economy, much less the Japanese
stock market," said Yuuki Sakurai, CEO of Fukoku Capital.
"The Fed has now spent up all its ammunition and it's still
got the fiscal cliff to deal with. And even if the BOJ
intervenes, the amount they can throw at the market is too
insignificant to make a difference to the exchange rate."
Japan's government cut its assessment of the economy for a
second straight month on Friday and a Reuters poll showed
economists expect the economy to stall this quarter, keeping the
BOJ under pressure to provide further monetary stimulus.

HITACHI, NOMURA GAIN
Hitachi Ltd added 4.6 percent after Japan's biggest
industrial electronics company said it would increase its
first-half dividend to 5 yen per share from 3 yen a year
earlier.
Other significant gainers included Japan's top investment
bank Nomura Holdings, up 4.2 percent after it said it
had restructured the management team at its U.S. equities group,
which comes a week after it announced a plan to scale back its
traditional stock trading businesses worldwide.
The broader Topix index rose 1.7 percent to 756.88
in the heaviest trade since March 13, with 2.49 billion shares
exchanging hands.
Volume was also boosted by the settlement of a large number
of Nikkei futures and options contracts expiring in September,
with the settlement price of 9,076.79.
Seven & i Holdings Co Ltd lost 2.4 percent after
the Nikkei business daily said its first-half operating profit
would likely fall 2 percent to 147 billion yen ($1.9 billion),
marking its first decline for the period in three years.