* Nikkei up 1.1 pct, Topix 1.6 pct * Nikkei may test high for 2012 by year-end - analyst * Technical charts signal "overbought" - analyst * Volume key to sustained market's strength - analyst By Ayai Tomisawa TOKYO, Dec 19 (Reuters) - Japan's Nikkei average rose above the 10,000 mark for the first time since early April on Wednesday, led by exporters like Toyota Motor Corp, as signs of progress in U.S. fiscal talks and expectations of aggressive monetary policy under a new Japanese government boosted sentiment. The Nikkei was up 1.1 percent at 10,035.69 by midmorning after rising as high as 10,060.93 earlier, its highest level since April 3. Analysts said investors would 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. Exporters were in demand, with Toyota adding 2 percent, Honda Motor Co gaining 3.2 percent and Canon Inc soaring 4.3 percent. "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." The Nikkei's recent gains took its 14-day relative strength index to 83.27, well above 70 which is deemed overbought and often indicates a possible near-term correction. The "toraku" ratio, or up-down ratio, for the first section of the Tokyo Stock Exchange was at 152. It is calculated by dividing the 25-day moving average of stocks that gained by the 25-day average of those that fell. A level above 120 signals an overheated market. "We need to monitor if market's strength is followed with consistent volume," said Hikaru Sato, a senior technical analyst at Daiwa Securities. "A lot of foreign investors will be taking Christmas holidays from later this week, so if trading volume becomes thinner, that's when a correction may be seen." The broader Topix index gained 1.6 percent to 830.18. On Tuesday, about 3.42 billion shares changed hands on the main board, the most since March 9. That compared with last week's average daily volume of 2.29 billion shares. 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 18.9 percent this year, with 16 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 84.41 yen, not far off a 20-month high of 84.55 set Monday.