Nikkei hits 27-year high on weak yen, upbeat corporate outlook

* Nikkei stretches rally, hits highest level since Nov 1991

* Companies seen revising up earnings forecasts as yen weakens

TOKYO, Oct 1 (Reuters) - Japan’s Nikkei share average rose to a 27-year high on Monday, as an extended weakening in yen helped improved export earnings prospects for Japanese corporations.

The Nikkei ended the morning session up 0.59 percent at 24,263.07 after going as high as 24,306.54, its strongest since November 1991.

According to the Bank of Japan’s quarterly “tankan” survey of business sentiment published on Monday, big manufacturers saw the dollar averaging 107.40 yen for the 2018/2019 financial year.

The U.S. currency has risen significantly above such a forecast, trading at a near 11-month high just short of 114.00 yen on Monday. A weaker yen boosts manufacturers’ profits made abroad when repatriated.

“The yen is at a weaker level than the tankan forecast. Corporations could therefore revise up their earnings outlook, and such expectations are likely to support the stock market going forward,” said a strategist at a domestic brokerage who could not be identified because of company policy.

The tankan showed that rising raw material costs and a string of natural disasters that disrupted production sapped business confidence among Japan’s big manufacturers in the September quarter.

But despite the somewhat subdued business mood, the tankan also underscored solid corporate capex plans, driven by demand for refurbishing capacity and boosting investment in robotics and automation to cope with labour shortages in the ageing population.

Boosted by the yen’s depreciation and buying by foreign investors - latest data shows that their weekly purchases of Japanese equities have hit the highest since 2014 - the Nikkei has risen roughly 7 percent since the beginning of September.

Exporters rose, with Tokyo Electron gaining 3.2 percent, Fanuc Corp adding 1.5 percent, Kyocera Corp climbing 1.2 percent and Bridgestone Corp rising 0.4 percent.

The weaker yen did not benefit all exporters with Subaru Corp dropping 2.4 percent after the automaker announced late on Friday that it had falsified data related to vehicle safety.

Other decliners included Asia Pile Holdings Corp which sank 12 percent after the maker of concrete piles said it would issue 3.5 million shares via a public offering.

Of Tokyo’s 33 sub-indexes, 23 were in positive territory.

The broader Topix added 0.19 percent to 1,820.67. (Additional reporting by the Tokyo markets team. Editing by Eric Meijer)