* Yen up on relief that election uncertainty ends
* Rise exacerbated by stop-loss sell orders on dollar
* Investors now waiting to see what policies the DPJ follows
By Charlotte Cooper, Chief Markets Correspondent
TOKYO, Aug 31 (Reuters) - The yen rose to its highest in seven weeks against the dollar on Monday, boosted by the end of election uncertainty following a thumping win for the opposition Democratic Party of Japan (DPJ) and then by dollar sell orders.
The yen edged up after the landslide election victory on Sunday, and then gathered pace as automatic dollar sell orders were triggered close to 93.00 yen per dollar, traders said.
Investors are now waiting to see what policies the new government will follow and how it will differ from the old.
Democratic Party officials have said they would respect the independence of the Bank of Japan and are unlikely to intervene to weaken the yen, maintaining Japan's five-year absence from currency markets.
"The yen's firmness has been helped by hopes for a change, but how the DPJ-led government will work is unclear so the impact may not last too long," one senior trader for a Japanese bank said.
Traders said the dollar/yen had broken chart levels around 93.00, triggering stop losses around 92.90.
Another trader said dollar sales flows related to the end of the month may also have pushed the yen higher.
The dollar fell 1 percent 92.70 per dollar, its weakest level since mid-July. The euro also 1 percent to 132.93 yen but was steady on the day at $1.4309.
The Democrats' leader, Yukio Hatoyama, has said he would not name a cabinet until the new parliament had voted him in as prime minister but he is expected to set up a transition team quickly.
"There will be ups and downs in the dollar/yen ranges but we have to wait and see the new cabinet, especially who will take the finance minister's position," said a trader from a European bank in Tokyo.
Japan's Nikkei share index jumped to a 10-month high after the election victory for the Democrats.
"The DPJ may favour the consumer more, which ultimately could be favourable for the economy, but that's a long-run thing," Stephen Roberts, an economist at Nomura in Sydney.
Analysts say the Democrats' policies are unlikely to threaten the economy's gradual recovery from its worst recession in 60 years, since the party has given priority to reviving the economy over fixing state finances.
Japan's industrial output rose 1.9 percent in July, the fifth straight monthly increase, as exports recover on the back of stimulus spending around the world, and the pace of rise is expected to accelerate in the coming months.
The rise in July output was less than the 2.3 percent gain in June but topped the 1.4 percent rise expected by economists.
The Democrats plan to fund spending plans by mostly cutting waste, although economists worry that their pledge not to raise sales taxes could inflate an already huge public debt.
"Investors might be concerned about the potential for increased government spending if the DPJ chooses to expand bond issuance excessively, raising concerns about Japan's long-term fiscal stability," Geoffrey Yu of UBS wrote in a note. (Additional reporting by Wayne Cole and Anirban Nag, Kaori Kaneko and Satomi Noguchi in Tokyo; Editing by Rodney Joyce)