* Polls tipping Abe's election victory help sentiment
* Topix rises to highest levels since July 2007
* Oil sector slips as crude futures wither
By Lisa Twaronite
TOKYO, Oct 12 (Reuters) - Japan's Nikkei share average scaled its loftiest peak in more than two decades on Thursday, hoisted by records on Wall Street and underpinned by media forecasts that the ruling party bloc was headed for a win in elections later this month.
The Nikkei ended up 0.4 percent at 20,954.72, after earlier rising as high as 20,994.40, its highest since December, 1996.
The broader Topix was 0.2 percent higher at 1,700.13, after touching 1,703.67, its highest since July 2007.
Major stock indexes on Wall Street on Wednesday finished at record closing highs, bolstered by a report that a market-friendly candidate was being pushed as successor to Federal Reserve Chairman Janet Yellen.
Also aiding sentiment, media forecasts showed Prime Minister Shinzo Abe's ruling bloc heading for a surprisingly big win in a snap election on Oct. 22, assuring investors that his "Abenomics" programme of easy monetary policy, fiscal spending and promised structural reforms would continue.
"All of the polls were in line, so that makes the chances of Abe's party's victory seem high," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. "He was already likely to win, but a bigger than expected win would help him stick to his programs."
The Nikkei remains far from its record peak of 38,915, logged in December 1989.
"I think that 21,000 looks difficult to break within this week, but I wouldn't be surprised if the Nikkei hit that milestone next week," Fujito added.
Shares of Kobe Steel, which have plunged more than 35 percent this week after the steelmaker was caught up in a data fabrication scandal, edged up 0.5 percent.
A senior Japanese trade official said on Thursday that the trade ministry was treating the data fabrication as a serious matter that affected trust in the country's manufacturing industry. Kobe Steel's CEO said the firm's data-fabrication may have spread beyond Japan.
Japan's Toshiba Corp shares added 3.8 percent after the Tokyo Stock Exchange said on Wednesday that it was taking the beleaguered electronics giant off a special watchlist, citing improved internal controls. The move reduces but does not completely remove the risk of a delisting.
Restaurant operator Saizeriya Co soared 9.6 percent after it reported on Wednesday a 36.2 percent rise in its group net profit in its past business year, and forecast a 12.1 percent rise for the current the year through Aug. 31, 2018.