* Nikkei stretches rally, hits highest level since Nov 1991
* Companies seen revising up earnings forecasts as yen weakens
* US, Canada forge last-gasp deal to rescue NAFTA
By Shinichi Saoshiro
TOKYO, Oct 1 (Reuters) - Japan's Nikkei share average rose to a 27-year high on Monday, as an extended weakening in yen helped improved export earnings prospects for Japanese corporations, with a last-gasp deal to salvage NAFTA also lifting sentiment.
The United States and Canada forged a deal on Sunday North American time to preserve NAFTA as a trilateral pact with Mexico.
The Nikkei ended the day up 0.52 percent at 24,245.76 after going as high as 24,306.54, its strongest since November 1991.
The Bank of Japan's quarterly "tankan" survey of business sentiment published on Monday showed big manufacturers saw the dollar averaging 107.40 yen for the 2018/2019 financial year.
The U.S. currency has risen significantly above such a forecast, trading at a near 11-month high just short of 114.00 yen on Monday. A weaker yen boosts manufacturers' profits made abroad when repatriated.
"The yen is at a weaker level than the tankan forecast. Corporations could therefore revise up their earnings outlook, and such expectations are likely to support the stock market going forward," said a strategist at a domestic brokerage who could not be identified because of company policy.
The tankan showed that rising raw material costs and a string of natural disasters that disrupted production sapped business confidence among Japan's big manufacturers in the September quarter.
But despite the somewhat subdued business mood, the tankan also underscored solid corporate capital expenditure plans, driven by demand for refurbishment and increased investment in robotics and automation to cope with labour shortages and an ageing population.
The Nikkei has risen roughly 7 percent since the beginning of September, boosted by the yen's depreciation and buying by foreign investors - with the latest data showing their weekly purchases of Japanese equities at the highest since 2014.
"The focus going forward is when investors decide to take profit, triggering a downward correction in Japanese stocks," said Yoshinori Shigemi, global markets strategist at JPMorgan Asset Management.
"The trigger could come from a number of factors such as Chinese economic indicators and U.S. monetary policy."
Exporters rose, with Tokyo Electron gaining 2.2 percent, Fanuc Corp adding 1.4 percent, Kyocera Corp climbing 0.75 percent and Bridgestone Corp rising 0.6 percent.
The weaker yen did not benefit all exporters with Subaru Corp dropping 2.1 percent after the automaker announced late on Friday that it had falsified data related to vehicle safety.
Other decliners included Asia Pile Holdings Corp which sank 12.1 percent after the maker of concrete piles said it would issue 3.5 million shares via a public offering.
Itochu Corp gained nearly 7 percent after the trading company said it will cancel 78 million shares, or 4.69 percent of its outstanding stock, on Oct. 19.
Of Tokyo's 33 sub-indexes, 16 were in positive territory.
The broader Topix added 0.04 percent to 1,817.96. (Reporting by Shinichi saoshiro Editing by Eric Meijer)