* Chip shares gain on rising semiconductor index * Nikkei back to 'overbought' territory * Gains may be short-lived before Sunday election - trader * Correction expected after election - trader TOKYO, Dec 12 (Reuters) - Japan's Nikkei share average rose on Wednesday, hitting a 7-1/2 month high led by gains in tech shares which lifted Wall Street, but gains may be trimmed in late trade as investors are likely to lock in profits before Sunday's election. The Nikkei rose 0.6 percent at 9,583.60 after opening at 9,606.25, the highest level since April 27. The index appeared unmoved by news North Korea had launched a long-range rocket after reports the flight had been delayed. Chip-related shares outperformed the market after Philadelphia Semiconductor Index, or Soxx, rose 1.9 percent overnight, lifting confidence in the sector. Advantest Corp gained 1.7 percent, Nikon Corp jumped 4.1 percent and Canon Inc added 2.8 percent. But traders said that the rises may be short-term as the current market level is back to 'overbought' territory, noting that investors may not take large positions before the lower house election on Sunday. "Investors are buying as sentiment is positive after Wall Street rose on tech shares, but today's buying is not a serious bet," said Mitsushige Akino, a fund manager at Ichiyoshi Asset Management. "They may lock in short-term profits, and the Nikkei may be level with yesterday's close at the end of the day." The index's 14-day relative strength index stood at 70.69, while a level of 70 indicates that the market is overbought and it often signals a possible near-term pullback. The benchmark has risen 10.6 percent over the past month while the yen has softened after Shinzo Abe, the leader of the main opposition party which is expected to win a Dec. 16 election, called for aggressive policy action from the Bank of Japan, including embarking on "unlimited easing". Market players said that the market may see some correction after the election as hopes for easy policy are already priced in to the current market. "Investors who wasted no time chasing the market higher as soon as the yen started weakening will likely unwind their positions soon," said Makoto Kikuchi, the chief executive of Myojo Asset Management. "They probably will just 'eat in moderation', instead of trying to 'full their stomachs.'" Meanwhile, analysts noted that volume may stay light as investors keep an eye on the outcome of a two-day policy-setting meeting of the U.S. Federal Reserve which started on Tuesday. The Fed is expected to announce a new round of Treasury bond purchases when the meeting ends on Wednesday to replace its "Operation Twist" stimulus, which expires at the end of the year. Other exporters advanced on the back of a weak yen, with Honda Motor Co gaining 1.3 percent and Nissan Motor Co adding 1.2 percent as a weak yen lifts their overseas earnings when repatriated. The dollar last traded at 82.54 yen, a touch down from its 7-1/2-month low of 82.84 touched on Nov. 22. The Japanese currency has been pressured by expectations for more easing from the Bank of Japan, which meets next week. The broader Topix index added 0.7 percent to 791.69.