* Rising yen triggers futures selling by global macro investors - traders
* Nikkei has dropped for 4th week, fallen 6.7 pct for the week
* Nikkei's weekly drop likely be steepest since April 2014
By Ayai Tomisawa and Joshua Hunt
TOKYO, Sept 4 (Reuters) - Japanese stocks hit a fresh seven-month low on Friday afternoon as investors were seen selling futures as the yen rose further against the dollar, while investors stayed risk-averse before the release of a key U.S. jobs report later in the day.
The Nikkei dropped 2.5 percent to 17,737.01 in mid-afternoon trade after falling to as low as 17,608.17, its lowest level since Feb. 10.
For the week, the Nikkei has dropped 6.7 percent for the fourth successive week of declines, and is poised to post the biggest weekly drop since April 2014.
The dollar dropped to 119.10 yen in the afternoon, the lowest level since August 26.
A bounce in the yen against the euro and dollar triggered a sell-off in futures, presumably from such investors as global macro funds.
"I believe the medium and long term trend of equities in Japan has already turned downward and we're seeing lots of global investors reduce their exposure to Japanese equities," said Makoto Kikuchi, chief executive of Myojo Asset Management.
"Foreign investors are selling futures in preparation for reducing their cash equities portfolios and changing their asset location dramatically."
The selling in futures drove lower index-heavy stocks such as Fast Retailing Co, SoftBank Group and Fanuc Corp ; down 2.4 percent, 4.2 percent and 1.9 percent, respectively. The stocks together contributed a hefty 92 negative points to the Nikkei, accounting for about a third of the index's losses.
On Thursday, the European Central Bank had set the tone for foreign exchange majors by affirming its readiness to provide the euro zone with another dose of stimulus.
Traders also said that investors were also wary ahead of the key U.S. jobs report later in the day as markets continued to size up data to gauge when the Federal Reserve would start raising interest rates.
Exporters were mostly lower, with Toyota Motor Corp falling 2.5 percent and Panasonic Corp dropping 3.9 percent.
Banks also lost ground, with Mitsubishi UFJ Financial Group dropping 2.6 percent and Sumitomo Mitsui Financial Group shedding 3.1 percent.
The underlying sentiment in the market remained fragile, traders said, noting persistent worries about the Chinese economy.
In the last week, net selling of Japanese cash and futures stocks by foreign investors hit a record high as they shunned riskier assets on worries that a China-led slowdown could hurt global growth.
The broader Topix and the JPX-Nikkei Index 400 both dropped 1.7 percent. (Editing by Shri Navaratnam; Editing by Simon Cameron-Moore)