* Nikkei up 2.8 pct, Topix up 3.3 pct * Volume high: 3.41 billion shares change hands * Car, electronic makers may outperform among manufacturers -trader * Exporters gain on better earnings expectations - analyst * Market deeper into 'overbought' territory By Ayai Tomisawa TOKYO, Jan 4 (Reuters) - Japan's Nikkei share average climbed to a 22-month high on its first trading day of 2013, as a deal in Washington to avert the "fiscal cliff" buoyed investor risk appetite and the weaker yen lifted exporters such as Toyota Motor Corp. The Nikkei ended up 2.8 percent at 10,688.11, its highest close since March 4, 2011. It was also the Nikkei's biggest daily percentage gain since March 22, 2011. Volume was high, with 3.41 billion shares changing hands on the board, compared with 2.85 billion shares traded in the final business week of 2012. Exporters were in demand, with Toyota adding 6.4 percent, Honda Motor Co advancing 4.0 percent and Canon Inc gaining 2.4 percent. "It's a relief that the U.S. fiscal cliff was averted," said Hiroichi Nishi, general manager at SMBC Nikko Securities, noting that the market was cheering positive developments that happened while Japanese markets were closed for the New Year holidays this week. "Exporters should benefit from a weaker yen on expectations that they will have strong forecasts for the next fiscal year." On Wednesday, President Barack Obama signed "fiscal cliff" legislation that raises tax rates for top earners and extends tax cuts for the middle class. The yen traded at 87.83 yen to the dollar on Friday morning, its weakest since July 2010. A weaker yen inflates exporters' overseas earnings when repatriated. Yasuo Sakuma, chief executive of Bayview Asset Management, said carmakers and consumer electronics such as Nikon Corp and Canon would attract strong buying on the back of the weaker yen. "Among exporters, consumer products may outperform compared with, say, machinery makers," Sakuma said. "Investors prefer them to manufacturers like semiconductor manufacturing equipment, whose customers are companies that are still saving on capital spending." OVERBOUGHT SIGNALS Japanese shares gained 23 percent last year, their best yearly gain since 2005, after rising expectations of aggressive monetary stimulus under new Prime Minister Shinzo Abe weakened the yen and bolstered exporters. Analysts said the Nikkei would probably stay strong for the time being. But they also warned that with some technical charts signalling overbought levels, profit-taking could hit anytime. "Investors' risk appetites have come back. Investors are chasing the market higher for the sake of chasing the market higher," said Yoshiyuki Kondo, a strategist at Daiwa Securities. "It's like the chicken game. They are thinking about the risk of losing if they don't keep buying, but you don't know what could trigger a pullback." The Nikkei has risen about 23 percent since mid-November when Abe started calling for aggressive easing, taking the Nikkei deeper into "overbought" territory. Its 14-day relative strength index is at 83.28, far above 70 which is considered overbought and often indicates an imminent adjustment. The index is also trading nearly 10 percent above its 25-day moving average of 9,765.15. Analysts said investors are keeping an eye on the U.S. non-farm payrolls report due out later Friday. It is expected to show the economy added 150,000 jobs in December, according to a Reuters survey of economists, up from 146,000 in November. "Right now, market players are expecting a positive outcome, but if it disappoints the market, we may see a big drop," said Kondo of Daiwa Securities. "The market is so overheated that it could slide, even temporarily, and anything could be a trigger." Meanwhile, Sharp Corp fell 2.6 percent to 295 yen after the Yomiuri newspaper reported on Jan. 1 that it is considering raising more than 100 billion yen ($1.2 billion) this spring to bolster its capital base. The broader Topix gained 3.3 percent to 888.51.