* Turnover, volume both heavy
* Short-term hedge funds seen covering short positions - analyst
* Steel shares underperform after U.S. anti-dumping probe
By Ayai Tomisawa
TOKYO, May 8 (Reuters) - Japanese shares hit levels not seen in more than 17 months on Monday in heavy trade as the yen stayed weak after Emmanuel Macron was elected president of France, as a business-friendly vision of European integration helped boost investor confidence.
The Nikkei share average soared 2.3 percent to 19,895.70, the highest closing level since early December 2015. It was the biggest daily percentage gain since mid-February.
Macron's resounding victory over a nationalist, who had threatened to take France out of the European Union, brought relief to investors who had feared another populist upheaval after Britain's vote to exit the European Union last year.
Traders said long-term foreign investors such as pension funds and mutual funds had chased the market higher last month by buying Japanese stocks with robust earnings. But on Monday, short-term foreign investors such as hedge fund managers who were seen shorting Japanese stocks on geopolitical risks in late March to early April were seen covering their short positions.
"Political risks in Europe were one of the biggest risks of the year, but with Macron winning French election, such risks have receded so they are seen buying back," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
He said foreigners were seen buying cyclical stocks and companies with strong growth such as Keyence Corp, which ended 4 percent higher.
All of the Topix's 33 subsectors were in positive territory, and turnover was 3.4 trillion yen, the biggest since early December.
On the other hand, steel shares underperformed after U.S. trade officials on Friday said their anti-dumping and subsidy probe found carbon and steel cut-to-length plate from eight other countries harms American producers, locking in duties on the imports for five years.
JFE Holdings and Nippon Steel and Sumitomo Metal Corp fell about 0.3 percent each.
The broader Topix rose 2.3 percent to 1,585.86, with 2.408 billion shares changing hands, the highest since mid December.
The JPX-Nikkei Index 400 advanced 2.3 percent to 14,168.72. (Reporting by Ayai Tomisawa; Editing by Gopakumar Warrier)