* Nikkei has fallen 1.3 pct for the week
* Tech shares fall, while financials continue rally
By Ayai Tomisawa
TOKYO, Oct 5 (Reuters) - Japan's Nikkei fell to two-week lows on Friday morning, tracking weakness on Wall Street where rising U.S. Treasury yields have dimmed the allure of stocks.
The Nikkei share average fell 0.6 percent to 23,843.03 in midmorning trade, after trading above the 24,000 mark and hitting 27-year highs earlier this weak.
It fell to as low as 23,730.19, the lowest level since Sept. 20.
But noting that the market became overbought in a very short timeframe, analysts said Japanese shares were still vulnerable to profit-taking.
"The Japanese market is in a difficult position," said Masayuki Doshida, senior market analyst at Rakuten Securities. "Japanese shares tend to track strong performances in the U.S. where the economy is strong. But at the same time, when people become risk-averse on fears that many emerging market economies would suffer due to rising U.S. interest rates, Japanese shares are sold too."
Doshida added that investors are focused on whether the Topix, which has hit eight-month highs, will continue its rally to hit new highs.
"That will depend on how Japanese companies' first-half of earnings will be," Doshida said.
The Nikkei has fallen 1.3 percent or the week after posting three straight weekly gains. Over that time the Nikkei soared by a total of 7.9 percent.
U.S. Treasury yields continued their ascent to multi-year highs on the latest round of strong economic data on Thursday.
Data on jobless claims and factory orders were the latest in a round of strong economic reports this week, putting the focus squarely on Friday's payrolls report for September.
Japanese tech shares and suppliers to Apple Inc were sold after their U.S. counterparts lost ground overnight.
Tokyo Electron declined 2.6 percent, Advantest Corp tumbled 3.9 percent and Murata Manufacturing shed 2.4 percent.
Insurers and banks, which hunt for high-yielding assets such as foreign bonds, continued their rally after the yield on the U.S. benchmark 10-year note hit a high of 3.232 percent, marking its largest daily jump since the 2016 U.S. presidential election.
T&D Holdings soared 1.7 percent, MS&AD Insurance gained 1.1 percent and Mitsubishi UFJ Financial Group added 1.1 percent.
The Topix dropped 0.5 percent to 1,791.90. (Reporting by Ayai Tomisawa, editing by Eric Meijer)