* Softer yen continues to spur gains for exporters * China GDP matches consensus; on track for year target * Stocks sold-off on fears of bad earnings see recovery By Sophie Knight TOKYO, Oct 18 (Reuters) - Japan's Nikkei share average leapt to a three-week high after China's GDP figures reassured with no nasty surprises, prompting investors to buy back heavily battered shares that an increasingly soft yen made even more attractive. The benchmark rose 2 percent to 8,982.86 in heavy volume, sailing above its 25-day moving average as the yen softened to 79 versus the dollar, a fillip for exporters whose overseas earnings have been crimped by the strength of the Japanese currency. By the end of the day, 2.08 billion shares had changed hands on the main board, the highest since Sept. 14, after the U.S. Federal Reserve announced their latest round of bond purchases known as "QE3". "We're seeing lots of volume again today...the weak yen is a reflection of the atmosphere being risk-on," said Stefan Worrall, director of cash sales at Credit Suisse in Tokyo. "You've got China up, Europe looking a bit better, earnings in the U.S. looking better, and you've got this massive, exciting M&A that itself involves a massive currency bet," he added, referring to Softbank Corp's $20 billion purchase of a 70 percent stake in Sprint Nextel Corp. China's economy slowed for a seventh straight quarter in July-September, missing the government's target for the first time since the depths of the global financial crisis, but other data released on Thursday pointed to a year-end rebound. The GDP figures were also in line with market expectations, helping Nikkei China 50, an index of 50 Japanese companies with large exposure to the country, put on 2.5 percent. It is outperforming the benchmark with a jump of 6.2 percent so far this week. "There is still extremely negative sentiment around the global slowdown, particularly around China... but I think that pessimism has been largely priced in, making Japanese stocks cheap," said Tetsuro Ii, CEO of Commons Assets Management. "I think it's a good idea to buy over the next month or so while things are still cheap, and before we have to contend with the U.S. fiscal cliff and other obstacles," Ii said. The Nikkei has been hit in recent weeks as investors fret over profit warnings and likely lacklustre earnings to come, and the index lost 3.7 percent last week, its biggest weekly drop since May. But earnings in the United States this week have not been as bad as expected, boosting sentiment. Of the 14 percent of S&P 500 companies that have already reported profits, 65 percent have beaten analysts' expectations, above the long-term average of 62 percent. Moreover, many stocks are being bought back after their forecast cuts were not quite as severe as feared. A case in point, Yaskawa Electric Corp rose 6.7 percent, a 3-1/2-month high, for its fifth day of gains, after its downward revision of its full-year profit forecast fell within market expectations, leading investors to judge its recent sell-off as overdone. "They revise down, everyone knows it's going to revise down, and the stock rips. This lends a tone to anything else which is expected to have sharp revisions down," said a trader at a foreign bank who did not wish to be named. In just the last four sessions, the Nikkei has clawed back above the 61.9 percent retracement of its fall between September 19, after the Fed's announcement of QE3, and last Friday. TIME TO MOVE? Upbeat U.S. housing and other economic data has also improved sentiment for risk assets, decreasing appetite for the "safe haven" yen, which is holding a whisker above a five-month low against the euro and a tad higher than a two-month trough versus the dollar. Automakers were strong, with Honda Motor Co jumping 4 percent on the back of a more attractive exchange rate. Toyota Motor Co likewise added 2.5 percent to a three-week high, in spite of a report that it is looking to cut production by 200,000 cars this year due to lower demand in China. Elsewhere, Nissin Electric Co Ltd rose 4.6 percent after JPMorgan upgraded the LCD screen maker to "overweight" from "neutral", saying it was likely to score record high earnings in 2013 and that the share price's fall of 19 percent over the last three months was overdone. The broader Topix climbed 1.7 percent to 752.30 in heavy trade, with volume at 132.7 percent of its 90-day average.