* Nikkei up 1.3 pct so far this week
* Fast Retailing surges, limiting Nikkei's fall
By Ayai Tomisawa
TOKYO, March 3 (Reuters) - Japanese stocks edged down on Friday as investors took profits before the weekend, after hitting a 14-month high the previous day on rising expectations for a U.S. interest rate hike this month.
The Nikkei dropped 0.2 percent to 19,536.39 points in mid-morning trade, after climbing to as high as 19,668.01 on Thursday, the highest intraday level since December 2015.
The Nikkei so far is up 1.3 percent this week.
Nearly two-thirds of the Topix's 33 subsectors were in negative territory. But the drop in the Nikkei benchmark index was limited due to gains in index-heavyweight Fast Retailing Co Ltd, which rose more than 2.5 percent on strong monthly sales, adding a hefty 36 positive points to the index.
Analysts said that many investors were on the sidelines awaiting a speech by Federal Reserve Chair Janet Yellen later in the day, which could provide the strongest indication yet about an interest rate move in coming weeks. The Fed's next policy-setting meeting was set for March 14-15.
The dollar inched slightly lower on the day to 114.35 yen , yet stayed near Thursday's peak of 114.595, its highest since Feb. 15.
"Markets have priced in hopes for a U.S. rate hike this month," said Hikaru Sato, a senior technical analyst at Daiwa Securities. "In order for the Japanese market to rise further, we need more positive catalysts and the key is if the dollar trades above 115 yen."
Exporters were mixed with Toyota Motor Corp falling 0.4 percent, Honda Motor Co Ltd rising 0.2 percent, and Tokyo Electron Ltd shedding 0.6 percent.
Mining stocks fell with Inpex Corp tumbling 3.7 percent and Japan Petroleum Exploration Co Ltd declining 2.5 percent. Before taking a breather on Friday, oil prices fell more than 2 percent on Thursday after Russia's output remaining unchanged in February.
The broader Topix dropped 0.2 percent to 1,561.27 and the JPX-Nikkei Index 400 fell 0.3 percent to 13,985.70. (Editing by Randy Fabi)