* Nikkei heads for the first drop in 4 weeks
* Defensive stocks buck weak market
By Ayai Tomisawa
TOKYO, June 28 (Reuters) - Japan’s Nikkei fell on Friday as investors turned cautious ahead of much awaited talks between U.S. and Chinese leaders at the G20 summit, with cyclical shares sliding on profit-taking before the weekend.
The Nikkei share average dropped 0.5% to 21,222.44 points by midmorning, after rising 1.2% on Thursday on investor optimism that there will be progress in the U.S.-China trade dispute.
U.S. President Donald Trump said on Wednesday a trade deal with Chinese President Xi Jinping was possible this weekend but he is prepared to impose U.S. tariffs on most remaining Chinese imports if the two countries don’t agree.
Trump said on Friday he will discuss trade with Japanese Prime Minister Shinzo Abe at their talks on the sidelines of the G20) summit, as Washington pushes to cut its big trade deficit.
But ahead of the weekend, investors turned cautious and unwound their positions in cyclical stocks, analysts said.
For the week, the Nikkei looked set to shed 0.2%, heading for its first weekly decline in four weeks.
“Even if the two countries land a positive agreement, Japanese equities would benefit little. Expectations in the market are that the U.S. will ease their monetary policy, which would make the dollar pressured against the yen,” said Isao Kubo, an equity strategist at Nissay Asset Management.
“Whether the yen strengthens or not is also of investor concern.”
Exporters, which rose the previous day, lost ground on profit-taking. Tokyo Electron dropped 0.8%, Subaru Corp shed 1.2% and Fanuc Corp fell 1.5%.
Bucking the weakness, defensive shares were in demand. Astellas Pharma soared 1.3% and Otsuka Holdings rose 1%, while Tokyo Gas added 0.2%.
The broader Topix dropped 0.5% to 1,546.06. (Editing by Kim Coghill)