* Nikkei poised to rise for 7th week
* Subaru falls on news co fails to follow proper inspection
TOKYO, Oct 27 (Reuters) - Japan's Nikkei share average rose 1 percent to a 21-year high on Friday, led by banking shares as U.S. yields remained high and by tech shares after their U.S. counterparts posted strong earnings.
The Nikkei rose 0.9 percent to 21,937.82 points by midmorning, after hitting as high as 21,968.75, its strongest level since mid-1996.
For the week, the index has risen 2.3 percent, on track to post seventh straight weekly gains, the longest weekly winning streak in almost a year.
It had risen for a record 16 straight sessions through Tuesday before dipping on Wednesday.
Shares in financial firms, which invest in high-yielding products such as foreign bonds, staged a rally, with Mitsubishi UFJ Financial Group surging 2.9 percent and Mizuho Financial Group soaring 2.2 percent.
Insurance stocks were in demand as well, with Dai-ichi Life Holdings rising 1.4 percent and Sompo Holdings adding 1.3 percent.
On Thursday, 10-year U.S. Treasury note yields were at 2.453 percent, up from Wednesday's 2.444 percent. Ten-year yields hit a seven-month peak on Wednesday.
"Since global markets are resilient, foreign investors' risk appetite has been strong," said Mutsumi Kagawa, chief global strategist at Rakuten Securities. "The fact that the dollar is above 114 yen is also supporting the mood."
The dollar gained 0.1 percent to 114.12 yen, within sight of this week's three-month high of 114.245 touched on Wednesday.
Tech shares rose after Amazon.com Inc, Microsoft Corp, Alphabet Corps Google and Intel Corp posted stellar quarterly earnings on Thursday.
Advantest Corp jumped 4.7 percent, Sumco surged 3.1 percent, and NTT Data soared 2.0 percent.
However, Subaru Corp shed 1.9 percent after sources told Reuters that the automaker failed to follow proper inspection procedures for vehicles destined for the domestic market at a factory in Japan.
The broader Topix gained 0.7 percent to 1,766.62.
(Editing by Kim Coghill)