* BOJ raises asset purchases by 10 trln yen to 80 trln yen * Exporters gain as yen weakens on the back of the BOJ move * Fast Retailing recovers from Tues battering on China fears By Dominic Lau TOKYO, Sept 19 The Nikkei average hit a four-month closing high on Wednesday after the Bank of Japan eased monetary policy to bolster an export-driven economy that's struggling with sluggish global demand and fallout from a territorial dispute with China, Japan's biggest trading partner. On the heels of another round of stimulus by the U.S. Federal Reserve, the BOJ said it would expand its asset buying and loan programme by 10 trillion yen ($127.21 billion) to 80 trillion yen. The announcement weakened the yen to a one-month low of 79.23 yen to the dollar, which in turn lifted the shares of exporters. A strong yen is usually a negative factor for exporters as it eats into profits earned abroad as well as making their products uncompetitive. While China is a concern, developments in developed nations, particularly in the U.S., look encouraging, said Stefan Worrall, director of equity sales at Credit Suisse in Tokyo. He added that the BOJ's move "provides support that we haven't seen" since February when the central bank eased policy. The Nikkei ended 1.2 percent higher at 9,232.21 in brisk volume after rising as much as 9,288.53, or 1.8 percent. The BOJ surprised the market in February by expanding its asset purchases programme, which helped the Nikkei rally 10 percent in the subsequent month and pushed the yen about 7 percent weaker against the dollar over the same period. The Nikkei is up 9.2 percent so far this year, underperforming a 16 percent rise in the U.S. S&P 500 and an 11 percent gain in the pan-European FTSEurofirst 300 . Toyota Motor Corp, Honda Motor Co, Canon Inc and Sony Corp advanced between 1.7 and 2.7 percent on Wednesday. Nissan Motor Co rebounded 3.7 percent after sagging 5 percent on Tuesday following its suspension of production in China on concerns over escalating anti-Japanese protests. The company said it would resume production at four plants in Guangzhou and Zhengzhou in China on Wednesday. Other Japanese companies have also announced resumption of operations in China, easing concerns over the impact on their earnings. But a trader at a foreign bank said the production halt by Japanese companies could be good news as it might reduce excess inventories. Index heavyweight Fast Retailing Co Ltd recovered 3.3 percent, as it reopened most of the 40 casual-clothing stores it had closed in China on Tuesday in a move that had triggered a 7 percent slide in the share price. The broader Topix index gained 0.9 percent to 764.80, with nearly 2.08 billion shares changing hands, up from Tuesday's 1.8 billion and last week's average of 1.62 billion. BANKING ON REAL ESTATE "People were in wait-and-see mode this morning, and were concerned that the BOJ would do nothing and the yen would shoot up. But now a flood of short-covering has gushed into the market, that's all it is," said Yoshihiro Ito, chief strategist at Okasan Online Securities. The BOJ move also boosted banks and the real estate sector, which were in negative territory before the central bank decision. But investors locked in profits, leaving the real estate sector up 0.9 percent and the banking segment up 0.2 percent. Real estate companies Mitsui Fudosan, Mitsubishi Estate Co Ltd and Sumitomo Realty & Development Co Ltd were up between 0.7 and 1.5 percent. Goldman Sachs recommended investors to stay overweight in domestic-focused stocks such as real estate due to the uncertainty arising from mounting tensions between China and Japan. "China-related Japan stocks have been underperforming Topix since April 2012 as a result of the slowdown in Chinese growth. Nevertheless, until there is greater clarity on the situation, we believe related stocks may continue to face near-term pressure," Goldman Sachs strategists said in a note. "We continue to suggest overweight positions in domestic demand-oriented areas such as real estate and financials where news flow generally remains positive," they wrote.