* For the week, Nikkei is set to drop 0.7 pct
* Toshiba nosedives
By Ayai Tomisawa
TOKYO, Feb 17 (Reuters) - Japan’s Nikkei share average dropped on Friday morning with the market wary of a stronger yen and financials weakened as U.S. bond yields fell after comments by a senior U.S. Federal Reserve official were viewed as relatively dovish.
The Nikkei fell 0.6 percent to 19,238.73 in midmorning trade. For the week, the benchmark index has fallen 0.7 percent so far.
“With third quarter corporate earnings releases over in Japan, investors will likely monitor the dollar-yen levels for catalysts now,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.
Comments from New York Fed President William Dudley late on Wednesday were seen as more dovish than recent commentary from Fed Chair Janet Yellen.
Financial stocks, which were beneficiaries of higher U.S. yields earlier this week, underperformed after benchmark 10-year notes dropped to 2.44 percent, down from 2.50 percent late on Wednesday.
Mitsubishi UFJ Financial Group dropped 1.1 percent and Sumitomo Mitsui Financial Group shed 0.8 percent. Tokio Marine declined 1.3 percent while Dai-ichi Life fell 1.4 percent.
Toshiba Corp nosedived 10 percent on ongoing concerns that the stock may be demoted to the second section of the Tokyo Stock Exchange if it remains in negative net worth through the end of the business year.
Separately, S&P Global Ratings announced that its ratings on Toshiba remain on CreditWatch with negative implications, but also said that it will lower Toshiba’s ratings by multiple notches if support from banks includes any form of debt restructuring.
The broader Topix dropped 0.5 percent to 1,543.77 and the JPX-Nikkei Index 400 shed 0.5 percent to 13,848.56. (Repoting by Ayai Tomisawa; Editing by Eric Meijer)