* Toyota most traded stock by turnover, hits 4-year high * Expectations for new governor lift market * Shippers, steel and real estate strong By Ayai Tomisawa TOKYO, Feb 6 Japan's Nikkei average jumped 3.1 percent to a fresh 33-month high after the yen fell sharply on bets the central bank governor's decision to step down early will speed up aggressive monetary easing. Prime Minister Shinzo Abe has put the Bank of Japan under relentless pressure to do more to drag the country out of deflation and made it clear he wants a governor who will be bolder than the outgoing chief in loosening monetary policy. By Wednesday's midday break, the Nikkei added 343.91 points to 11,390.83, its highest level since April 5, 2010. If it tops 11,408.17, an increasingly likely prospect according to market players, it will reach a level not seen since October 2008. Despite the latest Nikkei surge, some traders doubt that appointment of a new central bank governor itself will drive the market up sharply from the current levels. "BOJ's joint statement last month was delivered while the central bank was threatened at gunpoint by Abe. No matter who gets appointed, it is very unlikely that he will be going against the government's policy," said Yasuo Sakuma, portfolio manager at Bayview Asset Management. Last month, the BOJ signed a joint statement with the government adopting a new 2 percent inflation target as a sign of its commitment to fighting deflation. It also announced a shift to "open-ended" asset buying, beginning in 2014. One possible candidate for governor is Heizo Takenaka, who served as economics minister under Prime Minister Junichiro Koizumi a decade ago. To Sakuma, the Nikkei could rise to around 14,000 if Takenaka gets the BOJ post. "It could lift the market further because he is foreign investors' favourite," Sakuma said. "He is the one who helped the country's economy recover through aggressive restructuring under the Koizumi-led government, and foreign investors like that." On Tuesday, BOJ Governor Masaaki Shirakawa said he would step down, together with his two deputies, three weeks before the end of his five-year term. "This is proof that the market is still running on speculation rather than the facts at hand... the Abe effect is creating something close to a bubble," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley. "And yet I think the market could yet rise when they announce the new governor's name, particularly if it makes an asset purchase budget of 50 trillion yen ($535 billion) from the BOJ more likely," he said. Fujito singled out Kazumasa Iwata, a former deputy governor to the BOJ and a vocal supporter of a 50 trillion yen fund, as the most likely candidate. Currency-sensitive shares jumped. Toyota Motor Corp , being the most traded stock on board by turnover, climbed 5.0 percent to its highest level since September 2008, also supported by a hike in its full-year operating profit guidance by 10 percent on the weaker yen and a firmer U.S. sales forecast. Other exporters also jumped on hopes that a weaker yen will lift their overseas earnings when repatriated and boost their competitiveness. Mazda Motor Corp and Nissan Motor Co Ltd rose 4.8 percent and 5.2 percent, respectively. The Japanese currency plumbed a fresh 33-month low of 93.80 yen to the dollar on Wednesday morning. Although Japan's earning season has been relatively weak, with 63 percent of the 99 Nikkei companies that have reported so far missing analysts' estimates, according to Thomson Reuters StarMine, investors are hoping that a more favourable exchange rate for overseas revenue will lift future profits. Shippers, highly sensitive to the general strength of the economy, sailed up 6.1 percent, while the iron and steel sector, hurt during the past year by falling steel prices, jumped 4.1 percent. The real estate sub-index advanced 3.8 percent. Better-than-expected euro zone data also supported bullish sentiment after political strife in Italy and Spain sent shivers through the market on Tuesday. Markit's euro zone composite PMI, seen as an indication of economic growth, climbed to a 10-month high for January and was slightly above the preliminary reading. The broader Topix jumped 2.9 percent to 966.63 in heavy trade, with 2.43 billion shares changing hands, which is on track to post the same daily volume as Tuesday's 4.8 billion shares, the highest since March 2011.