Nikkei climbs to 3-week high on imminent U.S. deal
* Short-term correction may be possible - analyst
* Strong July-Sept earnings may lift market in a few weeks - Nomura
TOKYO, Oct 17 (Reuters) - Japan's Nikkei share average extended gains into a seventh day and hit a three-week high on Thursday after U.S. President Barack Obama said he would sign legislation to reopen the government and avert a debt default as soon as it reaches the White House. The Nikkei was up 1.1 percent at 14,622.76 in midmorning trade after hitting 14,664.22 earlier, its highest since Sept. 27. The index traded above 14,606.66, a 61.8 percent retracement of its May high to its June low. "Investors seem excited as what was hanging over their heads will finally be lifted," said Yoshiyuki Kondo, an analyst at Daiwa Securities. But he added that since the Nikkei has added 613 points, or 4.4 percent, over the past six sessions, there may be a short-term correction in the market. "The rises have been too sharp over a short period of time," Kondo said. On Wednesday, U.S. Senate leaders hammered out an agreement to break the fiscal impasse late on Wednesday, paving the way for U.S. lawmakers to end the drama in Washington just hours before the government exhausts its borrowing authority. The Senate has passed the deal and sent the measure to the House of Representatives for final passage, before Obama signs it into law. Exporters rose as the dollar gained 0.2 percent against the yen to 98.96, with Toyota Motor Corp rising 0.8 percent, Honda Motor Co adding 1 percent and Sony Corp advancing 0.9 percent. Kansai Electric Power Co surged 4.6 percent after the utility revised up its April-September earnings forecast due to higher-than-expected revenue from air-conditioner usage in the hot summer. It now expects an operating profit of 54 billion yen ($546 million) for the six months compared with its initial forecast for an operating loss of 20 billion yen. Despite the possibility of a short-term correction, some analysts said the Nikkei may trade above 15,000 in a few weeks. Jun Yunoki, a strategist at Nomura Securities, said that after the long-stalled U.S. debt ceiling problem is resolved, the announcement from late October of Japanese companies' second-quarter results could herald a considerable improvement in market sentiment. "We are expecting about a 50-60 percent rise on year in companies' recurring profits for the second quarter. We are bullish for the Japanese market through the end of the year," he said.