* Cyclicals gain as Fed stimulus steps boost risk appetite * Hitachi rises after lifting H1 dividend * Seven & I slips on concerns of weaker outlook * Nikkei up 3 pct this wk, set for 2nd straight wk of gain By Dominic Lau TOKYO, Sept 14 (Reuters) - Japan's Nikkei average climbed 1.5 percent on Friday to above 9,000, its highest level in nearly three weeks, after bold plans for stimulus from the U.S. Federal Reserve boosted risk appetite and lifted beaten-down cyclical stocks. Miners and shippers, which have a relatively higher correlation with the health of the global economy, rallied the most. The mining sector jumped 4.7 percent, shippers rose 4.5 percent and steelmakers gained 3.5 percent. By the midday break, the Nikkei advanced 138.29 points to 9,133.44 in heavy volume, breaking above its 200-day moving average at 9,002.87 and the 23.6 percent retracement of its rally from July 25 to Aug. 20 at 9,012. A senior dealer at a foreign bank said buy orders were outnumbering sell orders "between 2 and 2.5 to 1". "A decent amount of flow, I would say ... not much hedge fund money but long-only primarily," he said, adding that currency moves, including the potential for intervention, remain a key concern. "Japan is going to continue to underperform so long as the currency strengthens. The open question is whether the Bank of Japan is going to step in and actually does something to the currency." He said the other question was whether the BOJ would follow its U.S. and European counterparts to offer further monetary easing at its meeting next week. Japan's government cut its assessment of the economy for a second straight month on Friday and warned that growth is pausing, signalling growing concern over the pain from the global slowdown and keeping the BOJ under pressure to provide further monetary stimulus. The Nikkei is up 3 percent this week, set for a second straight week of gains. For the year, it is up 8 percent, underperforming a 16.1 percent gain in the U.S. S&P 500 and an 11.4 percent rise in the pan-European STOXX Europe 600 . The first round of quantitative easing from the Fed helped the Nikkei surge 23 percent in the subsequent three months, and it climbed nearly 12 percent for the same period after the second dose of stimulus. But the yen is much higher now, hitting a seven-month high of 77.13 yen against the dollar on Thursday. That compares with a level of around 95 yen to the dollar in the three months after the first QE and around 80-84 yen for the same period after the second round. A stronger yen, which was quoted at 77.587 on Friday, is usually a negative factor for exporters as it eats into profits earned abroad. EXPORTERS JOINING THE PARTY On Friday, shares in many exporters were taking part in the rally. Toyota Motor Corp rose 0.8 percent, Honda Motor Co added 0.7 percent and Canon Inc was up 3.5 percent. The broader Topix index rose 1.3 percent to 754.12, with 88 percent of its full daily average volume for the past 90 days by the end of the morning session. Jun Yunoki, equity analyst at Nomura Securities, said domestic retail investors were likely to step up their selling because they needed to repay their margin borrowings. "If the market goes up, they will strengthen their selling because as the market goes up, they can lock up profits," he said. "They will be buying late in the rally ... They won't push the market higher but will be the support." Hitachi Ltd added 2.8 percent after Japan's biggest industrial electronics company said it would increase its first-half dividend to 5 yen per share from 3 yen a year earlier. Other gainers included Japan's top investment bank Nomura Holdings, up 3.5 percent after it said it had restructured the management team at its U.S. equities group, which comes a week after it announced a plan to scale back its traditional stock trading businesses worldwide. But convenience store operator Seven & I Holdings Co Ltd fell 1.3 percent after the Nikkei business daily said the company's operating profit for March-August would likely fall 2 percent to 147 billion yen ($1.9 billion), marking its first decline for the period in three years.