* Financials lead Aussie benchmark losses
* Gold stocks move up on prices
* NZ set to post first weekly drop in nine
By Aby Jose Koilparambil
April 5 (Reuters) - Australian shares dropped on Friday, with financials leading the losses, as investors kept a watchful eye on talks between the United States and China to resolve their bitter trade dispute.
The S&P/ASX 200 index .AXJO fell 0.7 percent to 6192 by 0042 GMT, extending a 0.8 percent fall on Thursday which followed a seven-session winning streak.
The benchmark is on track for a 0.2 percent weekly gain.
U.S. President Donald Trump, who is meeting with Chinese Vice Premier Liu He in Washington, said a trade deal with China is at least a month away and some of the tougher points of a deal had been agreed but there were still differences to be bridged. is Australia's largest trade partner, so the Sino-U.S. trade talks have garnered lot of attention among investors of local assets.
Overall, the Australian market largely shrugged off overnight gains on Wall Street, which rose chiefly on strong local job data and hopes of a quicker resolution to the trade deal before Trump's cautious comments gave investors pause.
"We had a good seven-day run and so there is a bit of profit taking there. It is a Friday and given the macro risks and geopolitics running around, you don't want to go in to the weekend with too much exposure," said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.
About 90 percent of the 27 financial stocks in the benchmark declined with the 'Big Four' banks dropping between 0.3 percent and 1.1 percent.
The broader market losses were contained by metal stocks, which were led higher by gold firms.
Gold inched higher as the dollar strengthened on the U.S. jobs data with firms including Newcrest Mining Ltd NCM.AX and Evolution Mining Ltd EVN.AX advancing 1 percent and 1.7 percent, respectively.
The world's largest miner and index heavyweight BHP Group BHP.AX slipped 0.3 percent while rival Rio Tinto (LON:RIO) RIO.AX gained 0.5 percent.
Higher oil prices helped the likes of Woodside Petroleum WPL.AX and Oil Search Ltd OSH.AX gain about 0.5 percent each.
Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 fell for a third straight day, dropping 0.8 percent to 9,814.09, and is set to post its first weekly loss nine, snapping its best weekly winning streak since January 2018.
Retirement village operator Summerset Group Holdings Ltd SUM.NZ was the top percentage loser on the benchmark, sliding as much as 7.4 percent, after the company said it was seeing increased settlement times due to slowing property markets in Auckland and Christchurch.