Nikkei strikes seven-year high as dollar bashes yen

TOKYO (Reuters) - Japanese stocks rose to new seven-year highs on Wednesday as heavyweight Fast Retailing Co surged on strong monthly sales, while exporters got a boost as the dollar rose against the yen after U.S. mid-term election results have showed Republicans made major gains.

Fast Retailing, which soared 2.3 percent, contributed hefty 37.50 points to the Nikkei benchmark after it said same-store sales at its Uniqlo clothing outlets in Japan rose 10.5 percent in October from a year earlier.

The Nikkei benchmark, which was trading in negative territory earlier in the day, ended 0.4 percent higher to 16.937.32, the highest closing level since October 2007.

In late afternoon trade, the dollar rose to a seven-year high to 114.40 yen after a sweeping victory by Republicans in the United States' mid-term elections raised hopes for an end to political gridlock in Washington, boosting risk sentiment.

But traders said that due to Japanese stocks' steep rises in a short period of time, profit-taking can hit in the near term.

The Nikkei soared 8.2 percent in the last three trading days as investors cheered the BOJ's policy announcement on Friday, as well as the Government Pension Investment Fund's decision to increase its allocation of funds to domestic stocks.

The broader Topix gained 0.2 percent at 1,371.76, while the JPX-Nikkei Index 400 advanced 0.1 percent to 12,523.76.

(Reporting by Ayai Tomisawa; editing by Simon Cameron-Moore)