* Nikkei's gains capped on Fast Retailing's heavy drop
* For the week, Nikkei has risen 2.9 pct
* Commodity stocks lead gains
* Steel shares higher after BoFA Merrill hike ratings
By Ayai Tomisawa
TOKYO, Oct 9 (Reuters) - Japan's Nikkei share average rose on Friday as Wall Street gained after the Federal Reserve's September meeting minutes suggested U.S. interest rates will remain near zero for the time being.
But the gains were capped after index heavyweight Fast Retailing Co dived 9.4 percent on earnings concerns, contributing a hefty 180 negative points to the Nikkei.
The company said it would open fewer U.S. stores for its core Uniqlo brand this year after a rapid expansion failed to entice customers, leading to a lower-than-forecast annual profit.
The Nikkei gained 0.4 percent to 18,214.41 in midmorning trade. For the week, the Nikkei has risen 2.9 percent.
The Fed minutes showed the U.S. central bank thought the economy was close to warranting a rate hike but decided it was prudent to wait for evidence a global economic slowdown was not knocking the United States off course.
A jump in oil prices triggered bargain hunting in commodity shares beyond oil-linked firms.
Japan Petroleum Exploration Co surged 3.0 percent, Toho Zinc Co jumped 7.6 percent and trading house Mitsubishi Corp rallied 3.2 percent.
Oil prices climbed to their highest in three months on Thursday after a closely watched oil forecaster predicted prices would climb to $75 over the next two years.
"The speculation about an imminent U.S. rate hike was a risk that investors had been dealing with for a long time. Because such concern is fading now, investors are willing to take risks," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.
Steelmakers also rallied after Bank Of America Merrill Lynch raised ratings of Nippon Steel & Sumitomo Metal Corp and Kobe Steel to 'buy' from 'neutral,' pushing their stocks up 3.9 percent and 4.1 percent, respectively.
Merrill said that it cut Nippon Steel's earnings forecast, but at current levels the shares have priced in excessive concerns about negative risks, and its valuation has become attractive. The brokerage also said that Kobe Steel benefits from a weaker yen and strong profitability among Japanese automakers, Kobe Steel's main clients.
Exporters were steady, with Honda Motor Co rising 2.5 percent, Panasonic Corp gaining 2.2 percent and Canon Inc adding 1.7 percent.
The broader Topix gained 1.1 percent to 1,497.86 and the JPX-Nikkei Index 400 advanced 1.2 percent to 13,433.42. (Editing by Shri Navaratnam)