* Securities shares outperform on upbeat market * Toyota strong, Nomura hikes target by 30 pct * Japan outperforms peers but still has upside -analyst * Toshiba sags on poor earnings By Ayai Tomisawa TOKYO, May 9 (Reuters) - Japan's Nikkei share average rose for a third session on Thursday, buoyed by a record finish on Wall Street and strong European shares, and led by gains in Toyota Motor Corp shares after the automaker reported full-year results. By the midday break, the Nikkei was up 0.7 percent to 14,381.99, nearing Wednesday's intraday peak of 14,421.38, its highest level since June 2008. The securities subsector, which gained 3.1 percent, was the best performer on hopes of an increase in commission fees on the back of an upbeat market. Nomura Holdings rose 5.1 percent while Daiwa Securities was up 1.5 percent. The Nikkei is trading 7 percent above its 25-day moving average of 13,436.46, which indicates that shares are overbought. "Japanese stocks have already been high and some investors have expressed concern of a short-term pull-back, but there's been renewed investor appetite after both U.S. and European stocks hit record highs," said Kenichi Hirano, a strategist at Tachibana Securities. The S&P 500 closed at an all-time high for a fifth session on Wednesday, while German shares hit all-time highs and the FTSEurofirst 300 index of leading regional shares rose to a five-year high. After a brief pause, the Japanese market has resumed its record run in recent sessions, underpinned by central bank and government policies to revive growth and as the United States, Germany and China snap a run of soft data with upbeat economic reports. The Topix was up 0.3 percent to 1,198.33 on Thursday. The Nikkei has gained 38 percent this year on Prime Minister Shinzo Abe's expansionary policy and the central bank's bold monetary policy. Over the same period, both the benchmark S&P 500 and the Dow Jones industrial average have added 15 percent and the FTSEurofirst 300 index has advanced 8.4 percent. "Japan outperforms its global peers. But it has more upside because speaking from a standpoint of an expected improving economy, Japan seems most promising (for investors)," said Hikaru Sato, senior technical analyst at Daiwa Securities. "More growth measures are expected in the second half of this year by the Japanese government, while in the U.S., people are still carefully monitoring its economic data... European markets started to pick up but worries about persistent debt problems linger." TOYOTA IN FOCUS Toyota, whose American Depositary Receipts (ADRs) rose more than 3 percent, gained 1.4 percent in Thursday trade and was the third-most traded stock by turnover despite its conservative profit forecast for the year through March 2014. "The company based its dollar-yen assumption at 90 yen, which is very, very conservative. If the company had based it at 95 yen, the forecast would have been impressive," said Tachibana's Hirano. Toyota expects operating profit of 1.8 trillion yen ($18.17 billion) in the current fiscal year, which would be below its peak of 2.3 trillion yen in the year ended March 2008. Nomura Securities, which hiked Toyota's target by nearly 30 percent to 7,500 yen from 5,800 yen while keeping a 'buy' rating, forecast a 68 percent annual rise in operating profit to 2.21 trillion yen for the current fiscal year. The brokerage assumed the dollar would trade at an average 97 yen and the euro at 126 yen. Each 1 yen weakening against the US dollar and euro boosts operating profits by 45.0 billion yen and 4.0 billion yen, respectively, Nomura said. Other exporters also rose, with Nissan Motor Co rising 2.7 percent and Sony Corp gaining 0.8 percent. But Toshiba Corp dropped 3.5 percent after it posted a worse-than-expected operating profit for the year ended March 31 due to weak TV sales. The dollar last traded at 98.83 yen, while the euro was at 130.07 yen.