* Exporters lead gains as dollar hits 1 week high vs yen * Sharp gives up some of previous day's sharp gains * Near-term correction may be possible - analyst By Ayai Tomisawa TOKYO, March 7 (Reuters) - Japan's Nikkei share average rose above 12,000 on Thursday for the first time in 4-1/2 years, as exporters gained on risk appetite boosted by a record high on Wall Street and the prospect of Japan soon adopting an aggressive reflationary monetary policy. The Nikkei rose 0.6 percent to 12,004.37 by the midday break after rising to as high as 12,069.60, its highest level since September 2008. Exporters led the gains as the dollar hit a one-week high against the yen after a report showed U.S. private-sector employers added a larger-than-expected 198,000 jobs in February. "Foreign investors are main buyers of exporters," said Tetsuro Ii, the chief executive of Commons Asset Management. "Exporters have gained sharply recently and they have become expensive," he said, adding that these valuations would likely be justified when earnings recover on the back of a weaker yen. The Nikkei has gained about 16 percent this year, outperforming its global peers as the yen had declined sharply on calls by new Prime Minister Shinzo Abe for aggressive easing. By comparison, the Dow has added 9.1 percent, the Standard & Poor's 500 Index has gained 8.1 percent while the pan-European FTSEurofirst 300 index has advanced 4.6 percent over the same period. "Our investment view on Japanese equities remains neutral and we still prefer the exporter companies mainly because we believe the weaker yen will bring a positive impact to their earnings for the quarter ending March," Toru Ibayashi, head of wealth management research of UBS Securities Japan, wrote in a note. But he added that the yen's weakening momentum has started to slow, which may lead investors to take profit on some stocks that have outperformed. While long-term sentiment in Japanese stocks remains positive, analysts also said that a near-term correction was possible. "As soon as the Nikkei trades 5 percent above its 25-day moving average, we see selling immediately. The index is unlikely to allow a wide distance to its 25-day moving average," said Kenichi Hirano, strategist at Tachibana Securities. The Nikkei's 25-day moving average was last at 11,416.39, 5.2 percent below the midday level. On Thursday, the Bank of Japan is likely to keep monetary policy unchanged, holding fire for new leaders who are expected adopt bolder measures to end nearly 20 years of mild deflation. The two-day meeting that started on Wednesday is the last for Governor Masaaki Shirakawa and his two deputies before they leave on March 19. Among exporters, Honda Motor Co gained 1.0 percent, Mazda Motor Corp rose 3.6 percent and Hitachi Ltd added 1.1 percent. GS Yuasa Corp, the battery maker for the Boeing 787 Dreamliner, jumped 8.2 percent to an 11-month high, after reports said U.S. safety regulators are poised to approve within days a plan to allow Boeing to begin flight tests of the now-grounded passenger jet with a fix for its fire-prone batteries. Sharp Corp gave up some of the gains it made a day earlier after sources said South Korea's Samsung Electronics Co Ltd is set to invest about $110 million in the struggling firm. The news was later confirmed by the company. The stock fell 6.5 percent after gaining 14 percent on Wednesday. Wall Street was mostly higher on Wednesday, with the Dow hitting another record, helped by the private payroll survey that bodes well for the monthly jobs report due on Friday.