Nikkei at highest close in 3 wks, exporters strong

*Nikkei at highest close since Oct. 15, up 4.5 percent

*Pares gains briefly after Obama win as factors exhausted

*Some policy doubts linger, but mood generally welcoming

*Banks and blue-chips surge as prices still seen low (Adds stocks, details)

By Elaine Lies

TOKYO, Nov 5 (Reuters) - Japan's Nikkei average rose 4.5 percent to a three-week closing high on Wednesday, buoyed by rises in Honda Motor Co 7267.T and other exporters after Barack Obama won the race for president of the United States.

The Nikkei pared gains briefly after Obama’s victory, which market players said was due mainly to the market having exhausted a major trading factor, but powered higher again in the last hour of trade.

Energy-linked shares such as trading firms including Mitsubishi Corp 8058.T gained after oil prices CLc1 jumped more than 10 percent on Tuesday to above $70 a barrel on signs that Saudi Arabia and other OPEC members had made cuts in crude exports. [O/R] Large banks also rebounded after sharp selling last month.

But the main focus of the day’s trade was the U.S. election, with shares spiking just prior to Obama’s victory in apparent anticipation, then paring gains afterwards before rising again.

“The spike in the early afternoon was the market saying ‘Congratulations, Mr. Obama,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

Others were somewhat more guarded.

“I think there’s definitely a welcoming mood, especially since the Democratic party will also do well in the House and the Senate, making it easy to pass policies,” said Katsuhiko Kodama, senior strategist at Toyo Securities.

“But over the longer term I wonder how good he’ll be. He doesn’t have a lot of experience and a lot of his policies seem merely to be throwing money around. The dollar may weaken a bit.”

Most said that the response of the dollar and Wall Street were key for the Nikkei, but that Japanese shares could be coming close to the end of a rally that has seen them gain 11 percent this week following losses of 24 percent in October, the worst month in the Nikkei’s 58-year history.

The benchmark Nikkei .N225 gained 406.64 points to 9,521.24, its highest close since Oct. 15, in moderate trade. The broader Topix .TOPX rose 6.2 percent to 966.91.

But many said the gains for the Nikkei were likely to be capped around 9,600, which Mitsubishi UFJ’s Yamagishi said was an important psychological point for the market since it was more than halfway back to the high marked last year, just before the Nikkei began heading downwards.

“There’s several months now before the new president takes up his position and still some big issues to tackle,” he added, referring to the summit of global leaders being held on Nov. 15 to discuss the financial crisis.

“Change is important but speed is important as well -- decision-making is key right now, as is carrying out the policies you’ve promised.” EXPORTERS CLIMB, BANKS BUOYANT

Exporters surged from the start of trade on a softer yen, with the dollar clinging below 100 yen throughout the day though it gave up some ground by afternoon JPY=.

Blue-chip exporters were popular with investors, since their sharp falls in October mean they are still good buys even now, said Yamagishi.

Honda gained 13.4 percent to 2,745 yen, while Canon Inc 7751.T surged 12.8 percent to 3,970 yen and Toyota Motor 7203.T rose 10.4 percent to 4,250 yen.

Large banks surged as well, with Mizuho Financial Group 8411.T climbing 16.1 percent to 288,400 yen and Mitsubishi UFJ Financial Group 8306.T up 11.3 percent to 698 yen. Sumitomo Mitsui Financial Group 8316.T rose 11.9 percent to 461,000 yen.

The sector still appeared bolstered after Credit Suisse raised its stance on the sector to “overweight”, saying that all bad earnings news is likely out after a series of profit warnings last week. [ID:nT278524]

Oil fell more than 2 percent to below $69 a barrel on Wednesday after Obama’s victory gave a boost to the dollar, but trading companies and energy firms still held onto gains.

Mitsubishi Corp rose 6.9 percent to 1,716 yen and fellow trading firm Itochu Corp 8001.T rose 8.1 percent to 560 yen. Oil and gas field developer Inpex surged 16.2 percent to 674,000 yen.

Trade was moderate on the Tokyo exchange’s first section, with 2.87 billion shares changing hands, compared with last week’s daily average of 3.01 billion.

Advancing stocks outpaced declining ones by more than 10 to 1. (Reporting by Elaine Lies; Editing by Chris Gallagher)