By Elaine Lies TOKYO, Nov 4 (Reuters) - Japan's Nikkei rose 6.3 percent to a two-week high on Tuesday as investors bought back exporters on a softer yen and relief over a quiet three-day weekend, with Panasonic (6752.T: Quote, Profile, Research, Stock Buzz) jumping after sources said it was planning to take over Sanyo Electric (6764.T: Quote, Profile, Research, Stock Buzz). Shares of big Japanese banks such as Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) and Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) advanced after Credit Suisse raised its stance on the sector to "overweight", saying that all bad earnings news is likely out after a series of profit warnings last week [ID:nT278524] But Nissan Motor Co (7201.T: Quote, Profile, Research, Stock Buzz) tumbled 10.6 percent after it more than halved its annual profit forecast and retracted its dividend target, hit by a slumping market and a strong yen. [ID:nT269546] Trade was thin, with many investors reluctant to buy actively ahead of the U.S. presidential election, a factor that also dampened activity in New York on Monday, when Japanese markets were closed for a holiday [.N]. "While people are holding back a bit ahead of the election, their big concern is less who wins than whether the result will be decided quickly or not," said Takashi Ushio, head of the investment strategy division at Marusan Securities. "The worst thing would be an extended political vacuum, with no sign of what economic policies could be expected." In 2000, the election won by U.S. President George W. Bush was not finally decided until well into December, but trends in Tuesday's race between Democrat Barack Obama and Republican John McCain could become clear soon after the first polls begin to close at 6 p.m. EST (2300 GMT) in Indiana. [ID:nN02489102] The benchmark Nikkei .N225 ended up 537.62 points at 9,114.60. The broader Topix .TOPX was up 5 percent to 910.70 points. Tokyo markets were closed on Monday for a holiday. Market participants said much of Tuesday's movements centred on short covering following a sharp sell-off ahead of the three-day weekend. Lehman Brothers collapsed on a three-day weekend in September, and Japanese investors have been shy of potential financial turmoil over long weekends ever since. The Nikkei tumbled 5 percent on Friday, capping off its worst month in its 58-year history. "We're seeing investors buying and selling very clearly on factors linked to individual shares. So Panasonic is surging and Nissan is falling," said Hiroaki Osakabe, fund manager at Chibagin Asset Management. "While you can say that markets are slightly reassured by a sense that things are settling down a bit more than last month, there's little comfort to be found in company earnings," Osakabe added. EXPORTERS ENERGISED Broad buying of a basket of shares centering on blue-chip exporters helped lift the Nikkei in the later part of the day, though gains far over 9,000 yen were limited by concern over Japanese company results in the second half of the current business year. Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) climbed 3.2 percent to 3,850 yen, while Hitachi Ltd (6501.T: Quote, Profile, Research, Stock Buzz) rose 7.3 percent to 486 yen and Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) was up 6.5 percent to 2,365 yen. Shares of Panasonic gained 6.8 percent to 1,614 yen, after rising as much as 9.3 percent at one stage. Sanyo soared 34.5 percent, up by its daily limit to 195 yen. "The reports about Panasonic are also positive for the overall market as they indicate industry realignment could happen across the board and across borders because stocks are so cheap now," said Fumiyuki Nakanishi, manager at SMBC Friend Securities. Mitsubishi UFJ Financial Group rose 4.9 percent to 627 yen and No. 3 bank Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research, Stock Buzz) climbed 7.9 percent to 412,000 yen. Mizuho Financial Group rose 7.1 percent to 248,400 yen. Trade was light on the Tokyo exchange's first section, with 2.26 billion shares changing hands, compared with last week's daily average of 3.01 billion. Advancing stocks beat declining ones by nearly 5 to 1. (Additional reporting by Aiko Hayashi; Editing by Edwina Gibbs)

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