* Nikkei rises 1.3 pct, Topix up 1.4 pct in heavy trade * Exporters gain as yen hits nearly 7-month low vs dollar * Japan Tobacco jumps to 3-month high as govt delays sales By Dominic Lau TOKYO, Nov 19 The Nikkei average climbed 1.3 percent to a two-month high on Monday on growing expectations that Japan's main opposition party will win next month's election and increase pressure on the central bank to ease monetary policy. A call by Liberal Democratic Party (LDP) leader Shinzo Abe for the Bank of Japan to further stimulate the ailing economy, including pushing interest rates to zero or below zero, has weakened the yen and boosted the shares of Japanese exporters. The Japanese currency fell to a near seven-month low against the dollar at 81.59 yen on Monday. A weaker yen allows exporters to earn more when they repatriate overseas earnings, as well as boosting their competitiveness. By the midday break, the Nikkei advanced 120.23 points to 9,144.39, comfortably breaking above its 200-day moving average at 9,074.24 and setting its sights on the next resistance level at 9,200. A senior trader at a foreign bank said investors had been underweight on Japanese equities and the rally could go further as they start to put their money into the market. "We advise some of the people to cover the shorts that they have had in the very heavily-shorted sectors like electronics," the trader said. He said he would go long on machinery and auto companies as they were well-managed, adding: "They are not going to fall apart if this trade reverses. The banks will." The benchmark has rallied 5.5 percent in the past three sessions, taking its year-to-date gain to 8.2 percent, slightly ahead of an 8.1 percent rise in the U.S. S&P 500 and a 7.5 percent advance in the pan-European STOXX Europe 600 index. Exporters posting sharp gains on Monday included Canon Inc , Toyota Motor Corp, Nissan Motor Co and industrial robot maker Fanuc Corp, up between 1.8 and 3.7 percent. The broader Topix advanced 1.4 percent to 761.64 in heavy trade, with volume at 66 percent of its full daily average for the past 90 trading days. Japan Tobacco Inc jumped 6.9 percent to a three-month high after the Ministry of Finance said on Friday it would not sell shares in the company before the end of December, removing a short-term overhang on the stock. An opinion poll showed on Sunday that the LDP has maintained its lead over the ruling party, strengthening its case to reclaim control of the government in the December election after a three-year absence. "If the landscape of Japanese politics and monetary policy could be altered by the election, it would be yen negative, equity positive and JGB negative," Bank of America Merrill Lynch said in a note. The brokerage said precision motor maker Nidec Corp , Nissan and Honda Motor Co were among those that would benefit from a weaker yen, while monetary easing would lift the appeal of the likes of Mitsubishi UFJ Financial Group and financial services firm Orix Corp. Mitsubishi UFJ rose 1.4 percent and Orix added 0.7 percent.