* 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 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
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
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
"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.