* Nikkei's weekly gain biggest since Dec 2011 * U.S. data, optimism on BOJ encourage investors * Yen/dollar falls to 3-1/2-year low * Fast Retailing up 24 percent for the week By Ayai Tomisawa TOKYO, March 8 Japan's Nikkei share average ended at a new 53-month high on Friday, as exporters and real estate shares rose helped by bullish U.S. data, a weakening yen, and ongoing optimism aggressive easing will soon be adopted by the Bank of Japan's new leadership. The Nikkei advanced 2.6 percent to 12,283.62, its highest closing level since September 2008. For the week, the index gained 5.8 percent, the biggest weekly gain since December 2011. It also sailed past the settlement price of the Nikkei 225 options and futures that expired on Friday morning at 12,072.98. Stocks were also supported by lower-than-expected jobless claims data signalling further improvement in U.S. employment, as well as the weaker yen which hit a 3-1/2-year low of 95.44 yen to the dollar on Friday after strong Chinese export data boosted risk sentiment. Exporters were bought on hopes that a weak yen would lift their competitiveness in the global market and raise their overseas earnings when repatriated. Honda Motor Co gained 2.7 percent, Nissan Motor Co advanced 3.0 percent and Toshiba Corp added 3.9 percent. Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities, said he believes extensive program buying is taking place. "When the futures go up, that pulls up the whole market," he said. Investors were bullish after the BOJ raised its outlook on Thursday, noting at the last meeting chaired by governor Masaaki Shirakawa that Japan's economy was "bottoming out". Successor Haruhiko Kuroda, who is expected to implement aggressive easing, takes his place soon. Real estate shares, which benefit from Prime Minister Shinzo Abe's reflationary policy, soared with Mitsui Fudosan Co rising 4.5 percent, Mitsubishi Estate Co gaining 5.2 percent and Sumitomo Realty & Development Co adding 4.2 percent. The broader Topix gained 1.6 percent to 1,020.50. Trading volume was large mainly due to the settlement of Nikkei 225 options and futures, with 4.84 billion shares changing hands. Last week's average daily volume was 3.32 billion shares. Analysts say foreign investors continue to pile into large-cap exporters as the yen stays soft, while retail investors are buying smaller domestic-focused companies. "An appetite for risky assets is rising as global shares such as U.S. stocks are up, the yen is weak... Investors think that they might lose if they don't buy Japan stocks now," said Yoshiyuki Kondo, an analyst at Daiwa Securities. Buying was also supported after Japan's Financial Services Agency said on Thursday that it would relax a regulation, called the uptick rule, to allow stock short selling only at a price that is higher than the last trade. "The market welcomes the news on deregulation of short selling because it would reduce volatility," said Kyoya Okazawa, head of global equities and commodity derivatives at BNP Paribas in Tokyo. "I think that's the biggest factor behind today's strong market sentiment." FAST RETAILING IS A STAR Index heavyweight and operator of the Uniqlo clothing stores Fast Retailing Co Ltd was the most-traded stock on the main board, contributing 114 positive points to the Nikkei. Shares of Fast Retailing, which on Monday announced strong February sales, were 24 percent up on the week. On Friday, Fast Retailing jumped 9.8 percent. The jump stemmed from a combination of algorithm buying and margin trading, a dealer at a Japanese brokerage said. Friday's notable losers were power utility companies, which are hurt by a soft yen because they import fuels. The power utility sector was the worst sectoral performer, dropping 1.2 percent. Convenience store operators also took a hit, with FamilyMart Co Ltd falling 1.7 percent after the Nikkei newspaper said its operating profit for the year ended Feb. 28 was likely to come in below its previously projected 45 billion yen, partly due to a drop in cigarette sales. Peer Lawson Inc slipped 1.4 percent.