Nikkei slides as escalation in U.S.-China trade war hurts sentiment

* Nikkei's falls 1%, then pares some of the loss
* Topix closes near a February low
* DeNA soars after share buyback announcement

By Ayai Tomisawa
TOKYO, May 13 (Reuters) - Japan's Nikkei dropped on Monday
as most cyclical sectors lost ground after the trade war between
the United States and China escalated, while a fall in U.S.
futures hurt sentiment.
The Nikkei share average .N225 ended 0.7% lower at
21,191.28, the lowest closing since March 28. The broader Topix
.TOPX shed 0.5% to 1,541.14.
Mini S&P futures ESc1 was down 1.1% as the Nikkei closed.
The dollar was down 0.2% for the day at 109.70 yen JPY .
The United States and China appeared at a deadlock over
trade negotiations 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.
Early on Monday, the Nikkei shed as much as 1% 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.
While Japanese indexes fell on Monday, the losses were
sharper last year when Trump first imposed tariffs on imports
from China.
"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.
Among Monday's biggest losers were shippers and machinery
stocks. Kawasaki Kisen 9107.T dropped 1.7%, Yaskawa Electric
6506.T declined 3.6% and Komatsu Ltd 6301.T dropped 1.9%.
DeNA Co 2432.T jumped 14% after the mobile game provider
said it would 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 Richard Borsuk)