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TOKYO, Dec 21 (Reuters) - Japan's Nikkei share average is likely to rise on Friday and test a nine-month high after Wall Street stocks rose on hopes for progress in U.S. fiscal talks, with exporters expected to gain on a weaker yen. The Nikkei is expected to trade between 10,050 and 10,200 on Friday, but most of the gains may come in early trade with profit-taking expected in the afternoon before a three-day weekend, market participants said. Japanese financial markets are closed on Monday for a national holiday. Nikkei futures in Chicago closed at 10,170, up from the close in Osaka of 10,030. "Although the market is overheated, more buying is expected as the yen is seen staying low even after the BOJ's steps have already been priced into the market," said Hiroichi Nishi, general manager at SMBC Nikko Securities. If the Nikkei reaches the 10,200-mark, it will be the first time since March 27. On Thursday, the Nikkei dropped 1.2 percent to 10,039.33. Despite Thursday's fall, the Nikkei was still deep in "overbought" territory, with its 14-day relative strength index at 75.67, well above 70 which is deemed overbought and signalling that a correction may be imminent. The yen stayed under pressure after the Bank of Japan expanded its asset-buying programme by an expected 10 trillion yen and signalled more action ahead including setting a higher inflation target. The dollar was at 84.36 yen, still within easy reach of a 20-month peak around 84.62 set earlier in the week. A weak yen inflates exporters' overseas earnings when repatriated. "Investors may chase the market higher by buying both exporters and financials on the back of ongoing hopes for (incoming premier Shinzo) Abe's reflationary policy," said Yutaka Miura, a senior technical analyst at Mizuho Securities. But he added that with a lack of trading cues, the market may succumb to profit-taking in the coming days, which may drag the Nikkei down near 10,000. "U.S. stocks rise and fall merely based on daily developments of U.S. budget talks ... Japanese stocks tend to follow Wall Street's performance, but the market is fed up with the same thing over and over so investors may just take profits to adjust their positions." Market observers said talks to avoid the so-called fiscal cliff of government spending cuts and tax hikes in the United States remained a key risk for markets in the closing days of the year. In the United States, Republican House Speaker John Boehner said he would keep working on a solution to the fiscal cliff while also slamming President Barack Obama's approach to budget talks. The broader Topix fell 0.1 percent to 838.61 in active trade on Thursday, with 3.74 billion shares changing hands on the main board. > Wall St bounces back on hope for 'cliff' solution > Euro edges up on dollar, whipsawed by 'fiscal cliff' > Bond prices nudge higher on U.S. fiscal muddle > Gold below $1,650/oz, down 1.1 pct on fund selling > Crude futures end mixed as budget deal stalls STOCKS TO WATCH --Lawson Inc Lawson is expected to report an operating profit of slightly above 53 billion yen for the nine months ended in November, up 6 percent on the year and marking a sixth straight year of record profit for the three-quarter period, the Nikkei business daily reported.