Nikkei hits 2-month high, led by exporters as yen slips
* Nikkei up 0.9 pct, Topix rises 0.8 pct * Yen hits 7-mth low vs dollar on expectations of LDP election win * Toyota, other exporters lead the charge higher By Dominic Lau TOKYO, Nov 21 (Reuters) - The Nikkei share average rose to a two-month high on Wednesday, led by exporters after the yen hit a seven-month low versus the dollar on expectations the Bank of Japan will be pushed to take aggressive stimulus action under a likely new government. Shinzo Abe, leader of the main opposition Liberal Democratic Party (LDP), has called for more extreme steps from the central bank, including setting a 2 percent inflation target, to pull the export-reliant economy out of deflation. His comments ahead of a Dec. 16 national election have whipsawed the yen, which hit a seven-month low of 81.86 yen to the dollar on Wednesday. A softer Japanese currency inflates exporters' overseas earnings when repatriated, and increases their sales competitiveness. Exporter shares that benefited from the weaker yen included Toyota Motor Corp, Canon Inc, Honda Motor Co and Nissan Motor Co, which gained between 1.7 and 2.3 percent. The Nikkei climbed 0.9 percent to 9,227.08 by midmorning, after slipping 0.1 percent on Tuesday to snap a four-session winning run. "What is driving the yen weaker is politics. Specifically, the LDP release their manifesto ... and reiterate their pro-stance for monetary easing, their strong hand they will take with the BOJ," a senior dealer at a foreign brokerage said. "Every stock that is up today is a yen-sensitive stock." "Nobody cares about last month's trade data ... There is going to be policy in place to drive the yen weaker, which your trade data is going to improve. There is no point in backward looking," the dealer said. Japan's exports slid 6.5 percent in October from a year earlier to mark the fifth straight month of declines, government data showed on Wednesday, weighed down by weakening global demand and a territorial dispute with China. Toyota was the second-most traded stock on the main board by turnover after Softbank Corp, which rose 2 percent to 2,974 yen after J.P. Morgan raised its price target on the mobile operator by 8.6 percent to 3,800 yen, another trader said. Canon and Honda were the fifth- and sixth-most traded, respectively. The broader Topix advanced 0.8 percent to 768.26. The benchmark Nikkei is up 9.1 percent this year, boosted by a 5.7 percent rally from Nov. 14 to 19. Still, the Japanese index lags a 10.4 percent rise in the U.S. S&P 500 and a 10.2 percent gain in the pan-European STOXX Europe 600.