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* Nikkei up 0.6 pct; Topix rises 0.8 pct * Nikkei approaches "overbought" territory * Exporters lead gainers on softer yen * LDP looks set to win a majority on Dec. 16 election By Dominic Lau TOKYO, Dec 6 (Reuters) - The Nikkei average climbed to a seven-month high above the key-9,500 mark on Thursday, buoyed by a weaker yen on persistent speculation the central bank would adopt bolder action to pull Japan out of deflation under a likely new government. Shinzo Abe, the leader of the main opposition Liberal Democratic Party who is expected to win a Dec. 16 general election, has been calling for the Bank of Japan to embark on "unlimited easing" and set an inflation target of 2 percent. The latest opinion polls showed the LDP was on course to win a solid majority. His comments have weakened the yen over the past three weeks, while the Nikkei has rallied 10 percent, led by exporters. The Nikkei rose 0.6 percent to 9,527.67 in mid-morning trade on Thursday, taking the index to near "overbought" territory, with its 14-day relative strength index at 69.9. Seventy or above is deemed overbought. "The market has been struggling with this 9,500 level on the Nikkei a few times. We need a convincing breakthrough there before it goes anyway," a senior trader at a foreign bank said, adding that volume has been thinning out lately and his buy and sell orders were even this morning. "We have seen sellers every single day in ETF (exchange traded fund) formats coming from the domestic side. Anybody who can take it higher are foreigners. The foreigners right now are quiet." Foreign investors were net buyers of Japanese equities last week for the third straight week. They bought a net 184.3 billion yen of shares in the week through Dec. 1, data from Japan's Ministry of Finance showed. Exporters in demand on Thursday included Toyota Motor Corp , TDK Corp, Daikin Industries Ltd and Honda Motor Co, up between 0.7 and 2.8 percent. The yen was quoted at 82.38 to the dollar after falling 0.7 percent to 82.46 yen on Wednesday. It touched a 7-1/2-month low of 82.84 yen to the dollar on Nov. 22. The broader Topix advanced 0.8 percent to 787.87. The benchmark Nikkei is up 12.7 percent this year, in line with a 12.1 percent rise in the U.S. S&P 500 and a 13.2 percent gain in the pan-European STOXX Europe 600 index. But Japanese equities are more expensive than their European peers, with a 12-month forward price-to-earnings ratio of 12.1 versus STOXX Europe 600's 11.1, data from Thomson Reuters Datastream showed. The S&P 500 has a 12-month forward P/E of 12.5.