Nikkei falls as escalation in U.S.-China trade war dents sentiment

* Nikkei falls as much as 1% at one point
* Topix nears a February low
* DeNA soars after big share buyback announcement

By Ayai Tomisawa
TOKYO, May 13 (Reuters) - Japan's Nikkei fell on Monday
morning as most cyclical sectors lost ground after a trade war
between the United States and China escalated, while a drop in
U.S. futures dented sentiment.
The Nikkei share average .N225 fell 0.5% to 21,237.71 at
the midday break, while the broader Topix .TOPX shed 0.1% to
1,547.56.
Mini S&P futures ESc1 fell 1% during Asian trade, while
the dollar dropped 0.3% at 109.650 yen JPY= , triggering a
sell-off in Nikkei futures at one point.
The United States and China appeared at a deadlock over
trade negotiations on Sunday as Washington demanded promises of
concrete changes to Chinese law and Beijing said it would not
swallow any "bitter fruit" that harmed its interests.
The trade war between the world's top two economies
escalated on Friday, with the United States hiking tariffs on
$200 billion worth of Chinese goods after President Donald Trump
said Beijing "broke the deal" by reneging on earlier commitments
made during months of negotiations.
Analysts said that the market's initial reaction to the news
was negative, forcing the Nikkei to shed as much as 1% earlier
and the Topix .TOPX to fall to near a February low, but
selling has eased as investors digested the news and decided
that it's too early to assess the impact from the latest
developments of the trade talks at this stage.
If the Topix falls below its February low of 1,536.65, it
will be the lowest since Jan. 16.
Meanwhile, White House economic adviser Larry Kudlow said on
Sunday that Trump and his Chinese counterpart Xi Jinping are
likely to meet during a G20 summit in Japan at the end of June
and discuss trade.
"Trade talks will continue, as there's a summit in Osaka, so
it's too early to price in the real impact to the economy in the
market yet," said Shoji Hirakawa, a chief strategist at Tokai
Tokyo Research Center. "The market reaction is different from
last year when Trump raised tariffs for Chinese goods for the
first time. We'll have to wait longer."
Cyclical shares such as shippers and machinery stocks were
sold. Mitsui OSK Lines 9104.T dropped 1.4%, Yaskawa Electric
6506.T declined 2.1% and Komatsu Ltd 6301.T dropped 1.5%.
DeNA Co 2432.T jumped 20% after the mobile game provider
said to buy back up to 26.14% of its own shares worth 50 billion
yen. The company also said it will launch a Pokemon mobile game
this fiscal year. (Editing by Simon Cameron-Moore)