Nikkei hits 1-wk high on Fed outlook, SoftBank up on earnings hopes

* Nikkei rises 1.2 pct, Topix up 1 pct

* Yen's retreat helps exporters such as Toyota

* SoftBank, Mitsubishi Motors among top gainers

* Fanuc slips after earnings

* Japan shares PER should rise to converge with US- Nomura

By Tomo Uetake

TOKYO, Oct 30 (Reuters) - Japanese shares jumped to a one-week high on Wednesday morning, led by SoftBank Corp surging on hopes of solid earnings, and on expectations the Federal Reserve will maintain its ultra-easy money policy for at least the next few months.

Analysts widely expect the Fed's policy statement due at 1800 GMT will not challenge the growing consensus that any tapering of its $85 billion of monthly asset purchases will be delayed to March at the earliest.

The benchmark Nikkei rose 1.2 percent to 14,502.86 in mid-morning trade, the highest since the middle of last week, after shedding 0.5 percent on Tuesday.

The broader Topix advanced 1 percent to 1,205.58 in relatively active trade, with volume at 45.4 percent of its full daily average for the past 90 trading days.

Benchmark heavyweight SoftBank Corp climbed as much as 3.3 percent after the Nikkei newspaper said the company's group operating profit could shoot up more than 70 percent for the six months ended Sept. 30, driven by sales of iPhones and other smartphones. It was the most-traded stock by turnover on the main board.

Mitsubishi Motors was also among top gainers, rising 4.1 percent, after the automaker on Tuesday reported a record operating, recurring and net half-year profits in April-September.

Taking the shine off the earnings glow on the day, heavyweight Fanuc Corp lost 3.3 percent.

The fall came after the industrial robots maker posted a better-than-expected operating profit for the six months ended on September 30 but forecast a drop in its full-year profit. It was the sixth-most traded stock by turnover on Topix.

The earnings season in Japan has failed to impress so far, but investors will have further trading opportunities from another batch of earnings later in the day from the likes of Honda Motor Co Ltd and Nintendo Co Ltd.

The yen's retreat also helped to boost exporters' shares, which tend to underperform on any strength in the Japanese currency as it hurts their competitiveness overseas.

"There's been to date a sense that U.S. markets are offering better returns than Japan and there may have been asset reallocation to U.S. from Japan," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo.

"Ultimately if U.S. continues to show risk-on, Japan can only follow, once the noise of earnings is over," he added.

The yen stepped back to around 98.25 per dollar, reversing its recent gains stemming from expectations that the Fed will delay scaling back its stimulus. The dollar has started to pull up given the Fed view is fully priced in by markets.

Toyota Motor Corp and Mazda Motor Corp added 1.6 percent and 1.8 percent, respectively.

The U.S. S&P 500 index ended at an record high on Tuesday, having gained 5.4 percent this month. In contrast, the Nikkei was almost flat in the same period.

But analysts at Nomura said the Nikkei could eventually catch up as Japanese shares look undervalued.

"The trend for P/E levels in the U.S. and Japan is toward convergence," said Hiromichi Tamura, chief strategist at Nomura, noting that the P/E ratio for the TOPIX is approximately 14, compared to around 15 for the S&P 500.