* Fast Retailing contributes hefty gains to Nikkei
* Event-driven funds likely chasing market higher before election - analyst
* Kobe Steel dives more than 8 pct, most-traded stock by turnover
By Ayai Tomisawa
TOKYO, Oct 13 (Reuters) - Japan’s Nikkei share average edged up and hit a fresh a 21-year high on Friday helped by index heavyweight Fast Retailing, while selling of Kobe Steel continued as worries from its data fabrication scandal extended overseas.
For the overall market, though, continued hopes that the ruling party bloc will win a general election later this month underpinned sentiment, traders said.
Kobe Steel Ltd dived more than 8 percent after the Nikkei business daily reported that more than 30 companies outside Japan were found to have received products with falsified specifications.
The paper also reported that quality inspection data in Kobe’s core steel products business was also falsified.
The Nikkei opened flat, traversing positive and negative territory, and then rose 0.3 percent to 21,013.38 in midmorning trade, the highest level since December 1996.
“This is an election play,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “Such hedge funds as event-driven funds are likely chasing the Japanese market higher thinking that it won’t fall before the election. But they may take profits at the end of the next week.”
Media forecasts showed Prime Minister Shinzo Abe’s ruling bloc heads for a surprisingly big win in a snap election on Oct. 22, assuring investors that his “Abenomics” programme of easy monetary policy, fiscal spending and promised structural reforms would continue.
Index-heavyweight Fast Retailing Co was the biggest contributor on the Nikkei benchmark index, rising 3.7 percent and contributing a hefty positive 46 points to the index after it posted a record profit for the fiscal year ended in August.
Financial stocks tumbled, with Mitsubishi UFJ Financial Group falling 1.1 percent and insurer Sompo Holdings shedding 1.9 percent.
Automakers also languished, with Toyota Motor Corp <7203.T. declining 0.6 percent and Honda Motor Co dropping 1.3 percent.
The broader Topix shed 0.1 percent to 1,699.19. (Reporting by Ayai Tomisawa; Editing by Eric Meijer)