Nikkei reaches 27-year high thanks to weak yen and optimistic outlook

* Nikkei stretches, reaches its highest level since November 1991

* Companies see revised earnings forecasts down as yen weakens

By Shinichi Saoshiro

TOKYO, Oct. 1 (Reuters) – Japan's average Nikkei share hit its highest level in 27 years on Monday, as the prolonged weakening of the yen helped boost Japanese export earnings prospects.

The Nikkei ended the morning session up 0.59% to 24,263.07 after reaching 24,306.54, its strongest since November 1991.

According to the Bank of Japan's quarterly business climate survey released Monday, major manufacturers saw the dollar rise to an average of 107.40 yen in 2018/2019.

The US currency has significantly advanced above this forecast, trading Monday at a high of 11 months, just under 114.00 yen. A weaker yen increases the profits of manufacturers made abroad during repatriation.

"The yen is at a lower level than expected by the tankan. Companies could therefore revise their earnings outlook, and such expectations should support the stock market in the future, "said a strategist from a national broker who could not be identified because of company policy.

The tankan showed that rising raw material costs and a series of natural disasters that disrupted production undermined the confidence of large Japanese companies in the September quarter.

But despite the somewhat moderate business climate, the tankan has also put in place strong business investment plans, motivated by demand for capacity upgrades and investments in robotics and automation.

Spurred by yen depreciation and foreign investor purchases, the latest data shows that their weekly purchases of Japanese equities have reached their highest level since 2014 – the Nikkei has increased about 7% since the beginning of September .

Exporters rose, with Tokyo Electron up 3.2%, Fanuc Corp up 1.5%, Kyocera Corp up 1.2% and Bridgestone Corp up 0.4%.

The yen's weakness did not benefit all exporters, as Subaru Corp lost 2.4% after the automaker announced Friday that it had falsified data on vehicle safety.

Other declining companies included Asia Pile Holdings Corp, which sold 12% after announcing the issue of 3.5 million shares through a public offering.

Of the 33 sub-indices in Tokyo, 23 were in positive territory.

The broader Topix added 0.19 percent to 1,820.67. (Additional report by the Tokyo Market Team, Edited by Eric Meijer)