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TOKYO, Dec 19 (Reuters) - Japan's Nikkei share average is set to test eight-month highs above 10,000 on Wednesday as investor appetite is boosted by signs of progress in the U.S. fiscal talks and expectations of aggressive monetary easing under the new Japanese government. Market players said the Nikkei was likely to trade between 9,950 to 10,100 on Wednesday, after Nikkei futures in Chicago closed at 10,030, up 90 points from the close in Osaka of 9,940. If the Nikkei tops the 10,000 mark, it will be the first time since April 4. Analysts said investors will likely try to chase the Japanese market higher towards the end of the year, with the 2012 high of 10,255.15 on March 27 a target. "The market is already in overbought territory, but investors are increasingly being alarmed that there is a risk of not having Japanese stocks in their portfolios," said Hiroichi Nishi, general manager at SMBC Nikko Securities. "It's like, you are driving at 500 km per hour while the speed limit is 100 km per hour, and even a cop cannot slow you down." On Tuesday, the Nikkei ended up 1.0 percent at 9,923.01, having risen as high as 9,967.24 during trade. The broader Topix index gained 1.1 percent to 816.85. The gains took the Nikkei's 14-day relative strength index to 80.64, well above 70 which is deemed overbought and often indicates a possible near-term correction. In the United States, hopes are high a deal will be struck to prevent the economy from going over the 'fiscal cliff', with the White House confident of reaching an agreement. The Bank of Japan starts a two-day meeting on Wednesday under intense political pressure to expand its asset-buying programme aggressively to snap the world's third-biggest economy out of its fourth recession since 2000. Shinzo Abe, who was elected as prime minister on Sunday, called for the central bank to embark on "unlimited easing" and set an inflation target of 2 percent. The Nikkei is up 17.4 percent this year, with 14.6 percent of that gain coming in the last five weeks as the yen weakened on the prospect of Abe's election. The dollar stood at 84.27 yen, not far off a 20-month high of 84.55 set Monday. > Wall St climbs on economy bets as it looks past cliff > Euro rises to 7-1/2-mth high on hopes of US budget deal > Prices fall on hopes of fiscal deal > Gold falls nearly 2 pct on hopes of US fiscal deal > Oil rises on 'fiscal cliff' optimism, refinery issues STOCKS TO WATCH --Toyota Motor Corp Toyota will keep its global output target for 2013 nearly unchanged from this year at 9.9 million vehicles despite a production cut at home, the Nikkei reported. Separately, it has agreed to a record fine of $17.35 million for failing to report a safety defect to the U.S. government in a timely manner, but maintained it has done nothing wrong. --Kirin Holdings Co Kirin is expected to report group operating profit of around 150 billion yen for the year ending December, the Nikkei reported.