Nikkei rebounds from 1-week closing low on US fiscal hopes
* U.S. optimism of budget deal lifts sentiment * Exporters rebound after setback * Yen bought, but seen weaker ahead of election By Dominic Lau TOKYO, Nov 29 (Reuters) - Japan's Nikkei average rebound on Thursday from the previous session's one-week closing low as investors took comfort from comments by the top Republican in the U.S. Congress that he was optimistic about reaching a budget deal with the White House. The Nikkei rose 0.5 percent to 9,356.54, facing resistance at its five-day moving average at 9,368.72. U.S. House of Representatives Speaker John Boehner on Wednesday voiced optimism that a deal could be reached to avoid a "fiscal cliff" of $600 billion in spending cuts and tax hikes starting in the new year. Failure to reach a deal could see the U.S. economy back in recession and drag down the global economy. Boehner's comments boosted U.S. and Europe stocks overnight. Japan's exporters gained ground on Thursday, after a bout of profit-taking following a recent rally spurred by a weaker yen. The yen has been under pressure on expectations Japan's main opposition party will win a Dec. 16 election and increase pressure on the central bank to adopt a bolder monetary policy. "The yen is back safely to the 82 handle (to the dollar). Yesterday was a bit of a consolidation day. People are happy to come in today and do a little bit of buying again," a senior dealer at foreign brokerage said. "We are going to be in a grace period until the election. Until then, people are prepared to buy into the idea that the yen is going to weaken further." Calls by Shinzo Abe, leader of the main opposition party Liberal Democratic Party, for the Bank of Japan to set an inflation target of 2 percent and embark on "unlimited easing" have weakened the yen sharply over the past two weeks, giving shares of long-suffering exporters a fillip. Exporters in demand on Thursday included Toyota Motor Corp , Canon Inc, Nissan Motor Co and Hitachi Ltd, up between 1.2 and 2 percent. JFE Holdings climbed 2.2 percent after the Nikkei business daily said the steelmaker is expected to generate positive free cash flow of about 100 billion yen ($1.2 billion) this fiscal year, due to lower costs, smaller inventories and lower capital expenditures. But Nakayama Steel Works Ltd slumped 10 percent after the same newspaper said the electric furnace steelmaker will seek waivers on some 60 billion yen ($733.27 million) of debts from more than 40 banks, as it seeks a credit-led turnaround of its business. The broader Topix gained 0.7 percent to 776.94. The benchmark Nikkei has rallied 8 percent over the past two weeks, taking the month-to-date gain to 4.9 percent, on track for its best monthly performance since June. The Nikkei is up 10.7 percent so far this year, trailing a 12.1 percent rise in the U.S. S&P 500 and an 11.7 percent gain in the pan-European STOXX Europe 600. Still, Japanese equities are more expensive than their European counterparts, with a 12-month forward price-to-earnings of 12 versus STOXX Europe 600's 11, data from Thomson Reuters Datastream showed. The S&P 500 has a 12-month forward P/E of 12.5.