* Nikkei rises 1.3 pct, Topix up 1.5 pct * Exporters gain as yen hits 7-month low vs dollar * Japan Tobacco jumps to 3-month high as govt delays sales By Dominic Lau TOKYO, Nov 19 The Nikkei average climbed 1.3 percent to a two-month high on Monday on growing expectations that Japan's main opposition party will win next month's election and increase pressure on the central bank to ease monetary policy. A call by Liberal Democratic Party (LDP) leader Shinzo Abe for the Bank of Japan to further stimulate the ailing economy, including setting interest rates to zero or below zero, has weakened the yen and boosted the shares of Japanese exporters. The Japanese currency fell to a near seven-month low against the dollar at 81.59 yen on Monday. A weaker yen allows exporters to earn more when they repatriate overseas earnings, as well as boosting their competitiveness. The Nikkei advanced 116.81 points to 9,140.97, comfortably breaking above its 200-day moving average at 9,074.21. A senior trader at a foreign bank said investors had been underweight Japanese equities and the rally could have further to go as they start to put their money into Japan. "We advise some of the people to cover the shorts that they have had in the very heavily shorted sectors like electronics," the trader said. He said he would go long on machinery and auto companies as they were well managed, adding: "They are not going to fall apart if this trade reverses. The banks will." The benchmark has rallied 5.4 percent in the past three sessions, taking its year-to-date gain to 8.1 percent, matching an 8.1 percent rise in the U.S. S&P 500 but outpacing a 7.5 percent advance in the pan-European STOXX Europe 600 index. Exporters posting sharp gains on Monday included Canon Inc , Toyota Motor Corp, Nissan Motor Co and industrial robot maker Fanuc Corp, up between 1.9 and 3.6 percent. The broader Topix advanced 1.5 percent to 762.35. Japan Tobacco Inc jumped 6.8 percent to a three-month high after the Ministry of Finance said on Friday it would not sell shares in the company before the end of December, removing a short-term overhang on the stock. A public opinion poll showed on Sunday that the LDP has maintained its lead over the ruling party, strengthening its case to reclaim control of the government in the December election after a three-year absence. Bank of America Merrill Lynch said in a note that precision motor maker Nidec Corp, Nissan and Honda Motor Co were among those that would benefit from a weaker yen, while monetary easing would lift the appeal of the likes of Mitsubishi UFJ Financial Group and financial services firm Orix Corp. Mitsubishi UFJ rose 1.6 percent and Orix added 0.6 percent.
The Pentagon releases photographs linked to allegations of abuse of detainees in Iraq and Afghanistan.