* Nikkei edges lower for the week
* Cyclical stocks attract buyers on recovered risk stance
* Tokyo Electron, Screen Holdings fall
* Kyowa Hakko Kirin soars to be 2nd biggest gainer on Nikkei
By Ayai Tomisawa
TOKYO, Aug 17 (Reuters) - Japan's Nikkei rose on Friday on hopes that talks between China and the United States next week would ease trade tensions, but chip-related stocks fell after Applied Materials disappointed investors with worse-than-expected earnings forecasts overnight.
The Nikkei share average .N225 ended 0.4 percent to 22,270.38. The benchmark index edged down 0.1 percent, following two straight weeks of declines.
The Wall Street Journal reported that the trade talks in Washington would take place on Aug. 21 and 22, just before $16 billion in new U.S. tariffs on Chinese goods take effect, along with an equal amount of retaliatory tariffs from Beijing. have started to expect that there could be a sign of progress towards ending the escalating trade war," said Takuya Takahashi, a strategist at Daiwa Securities. "But if such hopes are betrayed, the stock market may take a hit."
Cyclical stocks such as shippers, metal firms and financials outperformed. Mitsui OSK Lines 9104.T surged 2.5 percent, Sumitomo Metal Mining 5713.T advanced 1.9 percent and Mitsubishi UFJ Financial Group 8306.T rose 1.9 percent.
Chip equipment makers were sold, with Tokyo Electron 8035.T falling 1.4 percent and Screen Holdings 7735.T skidding 2.9 percent after Applied Materials Inc AMAT.O , the world's largest supplier of equipment used to make chips, forecast current-quarter profit and revenue below Wall Street estimates. Hakko Kirin 4151.T soared 4.1 percent to 1,985 yen to become the second biggest gainer on the Nikkei after Mizuho Securities raised the medical product maker's target price to 3,150 yen from 2,770 yen.
Mizuho said that the hike is due to an upward revision to the broker's peak annual sales forecast for Crysvita, a drug for hereditary X-linked hypophosphatemic rickets (XLH), to 200 billion yen ($1.80 billion) from 150 billion yen ($1.35 billion).
Mizuho maintained its outlook for a new profit growth phase from the fiscal year ending December 2019 due on expectation of higher royalties from Fasenra, a severe asthma treatment licensed to AstraZeneca, and an equity method profit contribution from the biosimilar operations.
The broader Topix .TOPX added 0.6 percent to 1,697.11.
(Editing by Simon Cameron-Moore)
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