* Nikkei rises 2.5 pct for the week
* Financials pull back from recent gains
By Ayai Tomisawa
TOKYO, Feb 22 (Reuters) - Japan’s Nikkei snapped four straight days of gains on Friday as weak U.S. economic data dampened sentiment, though the selling was contained by more signs of progress in U.S.-China trade talks.
The Nikkei share average dropped 0.2 percent to 21,425.51, while it posted a 2.5 percent gain for the week.
The U.S. Commerce Department said new orders for key U.S.-made capital goods unexpectedly fell in December.
The Philadelphia Federal Reserve’s gauge of U.S. Mid-Atlantic business activity also declined in February to its weakest since May 2016, while another report showed U.S. existing home sales dropped last month to the lowest since November 2015.
“Weak U.S. economic indicators are worrying the market, but hopes for more progress in U.S.-China trade talks are supporting the mood,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute.
Hirakawa said that since the Nikkei breached an immediate resistance level of 21,500 on Thursday, investors are looking out for the next resistance level at 21,800.
Focus in global markets is also squarely on high-level talks between U.S. and Chinese trade negotiators in Washington, with little more than a week left before a U.S.-imposed deadline for an agreement expires, which would trigger higher tariffs.
Reuters reported exclusively on Wednesday that the two sides were drafting language for six memorandums of understanding on proposed Chinese reforms, progress that had helped to lift investor sentiment.
Friday’s losers included financial stocks such as banks and brokers, which gained recently. Mitsubishi UFJ Financial Group dropped 1.2 percent and Sumitomo Mitsui Financial Group shed 0.8 percent, while Nomura Holdings fell 1.6 percent.
Exporters were mixed, with Toyota Motor Corp shedding 0.2 percent, Honda Motor Co rising 0.7 percent and Hitachi Ltd declining 0.8 percent.
The broader Topix declined 0.3 percent to 1,609.52. Declining issues outnumbered advancing ones 1,288 to 731. (Editing by Jacqueline Wong)