* Nikkei rises 0.9 pct, Topix gains 1.4 pct * Isuzu jumps on possible GM joint development * Stocks benefitting from Abe's policies gain By Tomo Uetake TOKYO, Jan 10 (Reuters) - Japan's Nikkei average rose on Thursday as renewed weakness in the yen bolstered shares of exporters, while data showing China's exports growth rebounded more sharply than expected in December from a three-month low also lifted sentiment. The Nikkei climbed 0.9 percent to 10,677.74 by the midday break, taking the index deep into "overbought" territory. Its 14-day relative strength index stood at 76.3, above the 70-mark which is deemed overbought and often indicates the market is ripe for a correction in the near term. The Nikkei China 50 index, comprised of companies with significant exposure to the world's second-largest economy, gained 1.5 percent as China's exports expanded at their fastest pace in seven months in December. Shares of exporters, which have suffered from a strong yen and competition from South Korean companies, have been boosted by the yen's depreciation in the past two months. The currency has been weakening since Shinzo Abe, the new prime minister, called on the Bank of Japan to adopt a bolder policy to revitalise the economy, including setting an inflation target of 2 percent. During that period, the Nikkei has rallied 23.3 percent. A senior trader at a foreign bank said some people remained sceptical of the rally, and many were buying derivatives instead of taking big positions in stocks. "It's sort of a slow burn but I actually prefer this. It's a much nicer rally where you have this 50, 60 basis points move higher than this crazy 3 percent, 4 percent day when we squeeze higher," he said. "It's a much higher quality rally because it gives people time to work and think of what they want to do." The trader said many investors were looking at call options with a strike price of 11,000, some 3.3 percent above the Nikkei's current level. Among exporters, Toyota Motor Corp, Honda Motor Co , Daikin Industries and Nikon Corp rose between 1.2 and 4.3 percent. The yen was down 0.2 percent at 88.06 to the dollar on Thursday after falling 1 percent in the previous session. Isuzu Motors Ltd climbed 4 percent, outpacing other automakers after General Motors Co said it and Isuzu would discuss the possibility of jointly developing a next-generation pickup truck. The broader Topix index gained 1.4 percent to 891.73 in active trade, with volume 15 percent above its full daily average for the past 90 trading days. FOREIGN NET BUY IN 8TH WEEK A change in sentiment towards Japan after Abe's call has perked up foreign investors' interest in Japanese equities. Foreign investors bought a net 178.9 billion yen ($2 billion) worth of shares in the week ended Jan. 5, the eighth consecutive week of net purchases, Ministry of Finance data showed. Stocks expected to be benefitting from Abe's policies, such as education providers and housing sellers, were in demand. The Nikkei newspaper has reported that the new prime minister plans to make certain gift money for grandchildren's education tax-exempt and to provide cash benefits to eligible home buyers. Tokyo Individualized Educational Institute jumped 9.6 percent, while homebuilder SxL Corp and Sanei Architecture planning were up 4.4 and 4.7 percent, respectively. BNP Paribas, however, recommended that investors book profits before the central bank's policy meeting on Jan. 21 and 22, saying gains were likely to be limited in the short term. "We are expecting the short-term upside to be limited: those with exposure can implement an overlay by staying long and selling an out of the money call as a yield enhancement strategy; those without exposure can buy a call spread when the market consolidates; and we would not object to investors who want to unwind part of the positions in order to lock in profits," the bank said in a research note.