* Nikkei, Topix both up 1.0 pct * Exporters, financials lead gains By Ayai Tomisawa TOKYO, Dec 21 (Reuters) - Japan's Nikkei share average rose to a 8-1/2 month high on Friday after Wall Street stocks climbed on hopes of progress in U.S. fiscal talks, while exporters gained from a weaker yen. Analysts said the market is upbeat on the weak yen, but most of the gains could be seen in early trade with some profit-taking expected in the afternoon before a long weekend with Japanese financial markets closed on Monday for a national holiday. The Nikkei gained 1.0 percent to 10,142.96 after rising to as high as 10,175.06 earlier, and if it touches the 10,200-mark, it will be the first time since March 27. "The Nikkei will probably stay strong for the rest of the year," said Takuya Takahashi, a strategist at Daiwa Securities. "Foreign investors likely have gone on Christmas holidays, so if they wanted to take profits, they would have done that by now. Even if there is a correction after today, it shouldn't be that big." After rising 17.1 percent over the last five weeks, the Nikkei is deep in "overbought" territory, with its 14-day relative strength index at 77.96, well above 70 which is deemed overbought and signalling that a correction may be imminent. Exporters were in demand, with Toyota Motor Corp adding 1.2 percent, Honda Motor Co rising 1.7 percent and Canon Inc gaining 0.9 percent. 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. Yutaka Miura, a senior technical analyst at Mizuho Securities, said that exporters and financials are likely to remain investors' hot pick stocks on persistent hopes for reflationary policies from incoming premier Shinzo Abe's . In the meantime, other 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 the budget talks. Financials outperformed, with Nomura Holdings soaring 4.4 percent, Mitsubishi UFJ Financial Group rising 1.8 percent and Sumitomo Mitsui Financial Group advancing 1.5 percent. The broader Topix added 1.0 percent to 847.22.