* Speculation that BOJ’s ETF buying supports market
* Nikkei ekes out small gains for 2016, 5th straight annual gains Takata soars on hopes it could settle charges with US
By Ayai Tomisawa
TOKYO, Dec 30 (Reuters) - Japan’s Nikkei share average dropped to a three-week low in choppy trade on Friday as investors took profits from the recent gains on the last trading day of 2016, but the market managed to eke out marginal gains for the year.
The Nikkei ended 0.2 percent lower at 19,114.37, the lowest closing level since Dec. 9. After trading in negative territory, the benchmark index turned positive in afternoon trade, with traders citing speculation that the Bank of Japan was buying exchange-traded funds to support the market.
The benchmark index added 0.4 percent for the year, posting a fifth straight year of gains, the longest annual winning streak since the late 1980s.
Japanese stocks have surged since Prime Minister Shinzo Abe took office, with the Nikkei hitting an almost two-decade high in June 2015, on hopes his Abenomics policies of monetary stimulus, fiscal expansion and structural reform would end decades of deflation and stagnation.
Attention has since shifted to U.S. politics and economic growth after Donald Trump’s surprising election to U.S. president last month.
Japanese equities were buoyed by the yen’s weakness against the dollar on expectations that the incoming administration would boost U.S. growth and stoke inflation via increased infrastructure spending, tax cuts and reduced regulation.
“The Japanese market has been largely influenced by global events this year such as Brexit and the U.S. election. For next year, the market continues to prepare for risks such as whether Trump can proceed with the policies that he has been promising,” said Kazuhiro Takahashi, an equity strategist at Daiwa Securities.
Takata Corp was under the spotlight again on Friday, surging as much as 21 percent to hit the daily limit up on news that the company could settle criminal charges with the U.S. Department of Justice before the Obama administration leaves office next month. The stock was the biggest gainer on the board.
Drugmakers and fishery stocks outperformed, with Astellas Pharma rising 1.3 percent and Eisai Co gaining 1.1 percent, and Nippon Suisan surging 2.7 percent.
Real estate shares and steel shares were sold. Mitsui Fudosan dropped 1.3 percent and Nippon Steel & Sumitomo Metal tumbled 1.2 percent.
Toshiba Corp rebounded 9.4 percent as retail investors were seen covering their short positions before the year end.
The stock nosedived about 40 percent and wiped about $6.5 billion off of its market value in the three days to Thursday after revealing earlier this week that it faces a potential multi-billion dollar writedown.
The broader Topix was flat at 1,518.61 and the JPX-Nikkei Index 400 fell 0.1 percent to 13,614.80. (Reporting by Ayai Tomisawa; Editing by Eric Meijer)