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Nikkei ends flat despite strong chip makers

* Eisai tumbles to daily limit-low

* Eisai's news reminds market of SanBio's crash - analysts

* Financials tumble as U.S. yields fall

By Ayai Tomisawa

TOKYO, March 22 (Reuters) - Japan's Nikkei ended little changed on Friday as chip-related stocks offset weakness in financial stocks and drugmakers, which tumbled after Eisai said it will end its Alzheimer drug trials.

The Nikkei share average closed up a scant 0.1 percent at 1,627.34 points, after flitting in and out of positive and negative territory. The index rose 0.8 percent for the week.

The broader Topix rose 0.2 percent to 1,617.11.

Chip equipment makers jumped, tracking a rise in U.S. tech shares overnight. Advantest Corp soared 6.2 percent and Tokyo Electron surged 5.2 percent.

But financial stocks sold off after the spread between the three-month Treasury bill yield and the 10-year note yield shrank to its narrowest level since August 2007 on Thursday in the wake of the U.S. Federal Reserve's decision to cease tightening monetary policy.

A narrower spread between the three-month and 10-year yields indicates increased market expectations of a recession.

"The U.S. tech sector's recovery is indicating that growth stocks are making a come back," said Norihiro Fujito, a chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

"On the other hand, financial stocks are under pressure reflecting the Fed's dovish stance."

Insurers and banks, which seek higher yielding products such as U.S. bonds, tumbled. T&D Holdings dropped 1.1 percent, Dai-ichi Life Holdings shed 1.2 percent and Mitsubishi UFJ Financial Group dropped 0.5 percent.

The drug sector was also in the spotlight, diving 3 percent and was the worst performer on the board.

Eisai Co nose-dived 17 percent to a daily-limit low of 7,565 yen after the drugmaker and its partner Biogen Inc said they are ending two trials of their experimental Alzheimer's disease drug aducanumab.

The news dragged down other pharmaceutical names such as Astellas Pharmaceutical, which plunged 3.5 percent and Takeda Pharmaceutical, which fell 0.7 percent.

"It's a blow to hopes for new treatment as this Alzheimer's drug was one of the drugs which had been expected to succeed," said Yoshihiro Okumura, a general manager at Chibagin Asset Management.

He said that Eisai's news reminded the market of SanBio Co's crash in January, when investors were disappointed with news that it and Dainippon Sumitomo Pharma Co saw their joint drug's clinical trial in the United States did not succeed.

"There is a common point with SanBio's case whose shares had been rising on expectations but crashed," said Okumura, adding that its Alzheimer's drug's failure was a warning to investors that they should not be overly optimistic about drugmakers' research and development. (Editing by Kim Coghill)