* Nikkei down 0.3 pct for the week
* Global econ indicators to set market direction for now - traders
* Life insurer tumbles after Fed decision
* Seven & i rises after report saying it will close non-performing stores
By Ayai Tomisawa
TOKYO, Sept 18 (Reuters) - Japan’s Nikkei snapped a three-day winning streak on Friday after the U.S. Federal Reserve kept interest rates unchanged on worries about the global economy, while investors refrained from taking large positions before long holidays in Japan.
The U.S. central bank held rates steady in a bow to worries about the global economy, financial market volatility and sluggish inflation at home, but it left open the possibility of a modest policy tightening later this year.
The Nikkei share average dropped 1.6 percent to 18,130.86 in midmorning trade, after rising 2.6 percent over the past three days through Thursday. For the week, the index has dropped 0.3 percent.
Markets in Japan will be closed from Monday through Wednesday for national holidays.
Traders said that the Fed decision left investors with two conflicting interpretations. Investors are concerned about the fact that the U.S. economy is not growing enough to warrant rate hikes, but at the same time, easy monetary conditions in the U.S. will now continue for an extended period of time, which should support the global equity markets, traders said.
“Global economic indicators will likely set the direction of the Japanese market for the time being,” said Michiro Naito, executive director of equity derivatives at JPMorgan.
“China will continue to worry global investors, and if its growth is worse than expected, it will likely rattle global markets again. Whether volatility persists or not will also depend on any signs that measure global growth.”
Analysts also said that the market will also take cues from Japanese companies’ earnings statements for the first half year ending September, which should start to appear out in late in the month.
Dai-ichi Life Insurance Co, which invests most of the premiums it gets from policyholders in bonds such as U.S. Treasuries, dived 5.5 percent.
Exporters lost ground after the dollar fell more than 1 percent overnight, hit by the Fed’s downbeat assessment of the U.S. economy. Toyota Motor Corp dropped 2.0 percent, Honda Motor Co fell 2.6 percent and Panasonic Corp shed 2.9 percent.
The dollar stood at 119.77 yen during Asian trade.
Banks were lower, with Mitsubishi UFJ Financial Group falling 2.9 percent and Mizuho Financial Group shedding 2.4 percent.
Bucking the weakness, Seven & i Holdings soared 3.5 percent after the Nikkei newspaper reported that the chain will close its non-performing 40 Ito Yokado stores by the fiscal year ending Feb. 2020.
The broader Topix dropped 1.4 percent to 1,470.85 and the JPX-Nikkei Index 400 declined 1.4 percent to 13,203.66. (Editing by Eric Meijer)