Nikkei hits 1-1/2-week high on U.S. deal hopes, weaker yen
* Nikkei rises in early trade, on track for weekly gain
* Investors remain wary of U.S. political stalemate
* Fast Retailing tumbles on disappointing earnings
TOKYO, Oct 11 (Reuters) - The Nikkei stock average climbed more than 1 percent to a 1-1/2-week high on Friday on hopes for progress in the United States towards ending the fiscal standoff, with exporters like Nikon Corp gaining as then yen pulled back from a recent high. The benchmark Nikkei rose 1.3 percent in midmorning trade to 14,375.02, its highest level since Oct. 2. It was on track for a 2.5 percent gain on the week. "Just a whiff of resolution on the U.S. ceiling debate saw a sharp risk-on and short squeeze, although it was just a whiff. You can see how much the debt impasse has been weighing on markets," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo. "The focus, the key question into the next week, is if this impasse has moved a step closer to being resolved. Everything else has fallen into the background, even earnings." House Republican leaders on Thursday offered a plan to extend the government's borrowing authority for several weeks, and the White House said it would consider the proposal, sparking a big rally on Wall Street. The New York Times later reported President Barack Obama had rejected the plan, but Republican Paul Ryan told reporters Obama had neither accepted or rejected the proposal.
The broader Topix climbed 1.6 percent to 1,196.60. Trade was moderate, with volume at 42.8 percent of its full daily average for the past 90 trading days. All 33 Topix subindexes were higher, with financials leading the gains. The banking sector and the securities sector rose 2.5 percent and 2.1 percent, respectively. Exporters advanced as the dollar strengthened against the yen. Nikon Corp jumped 4 percent, while Panasonic Corp and Daikin Industries Ltd both rose 2.9 percent. The greenback was last quoted 98.45 yen, well off a two-month low of 96.55 set on Tuesday. A weaker yen helps Japanese exporters' competitiveness in global markets and boosts their dollar earnings when repatriated. Toyota Motor Corp rose 0.9 percent and was the third-most traded stock on Topix. A jury in California on Thursday found the carmaker was not liable in one of the first wrongful-death lawsuits to go to trial in the United States over alleged defects that caused some vehicles to unexpectedly accelerate. But Nikkei heavyweight Fast Retailing Co Ltd lost as much as 5.4 percent to hit a five-week low after the Uniqlo clothing chain operator's full-year operating profit came in below its own target as heavy discounting depressed margins. It was the second-most traded stock by turnover on the main board. The Nikkei has gained 38 percent this year but is still down 10 percent from its May peak.