* Nikkei adds 0.06 pct, Topix ends effectively flat
* Exporters like automakers sag on yen's bounce
By Shinichi Saoshiro
TOKYO, Oct 4 (Reuters) - Japan's Nikkei rose to two-year highs, cheered by an upbeat outlook for the global economy though gains were trimmed by the close as the yen bounced against the dollar.
The day's biggest mover was Japan Display, which rallied on a report that it had developed methods to mass-produce OLED panels at a low cost.
The Nikkei ended Wednesday 0.06 percent up at 20,626.66 after reaching 20,689.05, a high last touched in August 2015. The broader Topix closed effectively flat at 1,684.56 after rising to 1,688.59, also a top last seen in August 2015 .
Stocks drew support from Wall Street where all three major indexes closed at yet another set of record highs overnight.
Equities have recently advanced amid signs of strength in large economies including the United States and Japan, with a modicum of calm in the Korea Peninsula easing investor risk aversion for now.
Data released so far this week showed Japan's business mood at a decade-high while a measure of U.S. manufacturing activity surged to a 13-1/2-year high in September.
"Japanese stocks are rising as part of a broader ongoing trend in global equities generated by an improvement in economic prospects," said Soichiro Monji, chief strategist at Daiwa SB Investments.
"Apart form the Bank of Japan, the major central banks are looking to exit easy monetary policies and investors shifting out of bonds into stocks are also seemingly supporting equity markets."
Japan Display rose as much as 29 percent after the Nikkei business daily reported the company had developed a way to mass-produce lower-cost organic light-emitting diode (OLED) screens and would start as early as in 2019.
The Nikkei said Japan Display had started approaching dozens of potential investors including Sony Corp and Canon Inc to raise 100 billion yen ($888 million) for mass production.
Exporters sagged as the yen advanced against the dollar following three days of losses, with Toyota Motor Corp dipping 0.25 percent, Honda Motor Co falling 0.5 percent and Mazda Motor Corp dropping 0.55 percent. Tokyo Electron and Olympus Corp each retreated 0.4 percent, respectively.
Aomori Bank Ltd dropped as much as 9.5 percent to its lowest since November 2016 after announcing a plan to issue 2.6 million new shares through a public offering.
Fast Retailing rose as much as 2.4 percent to its highest since mid-July after the operator of Uniqlo clothing outlets said its domestic same-store sales rose 6.3 pct in September from a year earlier.
Sakata Seed Corp rose 2.1 percent after the seed and gardening product supplier said it bought Jordan-based cucumber cultivating company Al Mourog Al Kasbah for Agri & Vet Co.
($1 = 112.6100 yen)
Editing by Shri Navaratnam