* Exporters rise on short-covering, U.S., Japan data help
* Trade cautious on policy uncertainty, before 5-day holiday
TOKYO, Sept 17 (Reuters) - Tokyo's Nikkei average rose 1.1 percent on Thursday, lifted by exporters such as Toyota Motor Corp after industrial output data helped buoy U.S. stocks to fresh 2009 highs.
A government survey showing that big manufacturers had turned optimistic in the three months to September as well as a mostly smooth start for Japan's new government were also lending support to market sentiment, market players said.
"We have had bits and bobs of positive news and not much in the way of negative news except for maybe Kamei's comment," said Soichiro Monji, chief strategist at Daiwa SB Investments.
Shizuka Kamei, the new minister for banking and market regulation and seen as an opponent of market-friendly reforms, sent bank shares lower on Wednesday with comments on lending.
Kamei said he would like to introduce a moratorium on some loan repayments to help small and midsize businesses and individuals struggling from the economic downturn.
The benchmark Nikkei gained 112.13 points to 10,382.90, after adding 0.5 percent the previous day. The broader Topix added 0.8 percent to 939.08.
The advance came despite comments from new Finance Minister Hirohisa Fujii who said that recent currency moves were not rapid and that a strong yen had merits for the economy, pushing the yen higher on Wednesday.
Investors fret about a stronger yen as it curbs exporters' profits when they are repatriated.
But further gains may be difficult as investors wait and see how the government's new policies pan out, say analysts.
"Some domestic investors appear to be reducing their stocks allocations not so much due to fundamental reasons but because of sentiment or supply and demand reasons. That is also putting a lid on further gains," Monji said.
Trade was also cautious ahead of a five-day holiday period from Sept. 19-23 in Japan.
Exporters climbed on short-covering and were also helped by a halt in the yen's advance against dollar. The dollar hit a seven-month low below 91 yen earlier this week.
Toyota climbed 1.6 percent to 3,770 yen, while industrial robot maker Fanuc Ltd added 1.7 percent to 7,820 yen and chip-tester maker Advantest Corp jumped 3.3 percent to 2,365 yen.
But Kao, Japan's largest maker of toiletries, dropped 2.2 percent to 2,205 yen after the company said it will halt shipments in Japan of its flagship Enova cooking oil products, because they contain fatty acid glycidyl esters. Glyceride ester is said to be a possible cause of cancer.
U.S. stocks rose for a third day on Wednesday, hitting fresh 2009 highs in a broad-based rally after data showing U.S. industrial output advanced for a second consecutive month in August.
In addition to the government's survey which showed that big Japanese manufacturers turned optimistic about business conditions, a Reuters Tankan survey also showed improvement in manufacturers' sentiment. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)