* 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 ended 0.7% lower at 21,191.28, the lowest closing since March 28. The broader Topix shed 0.5% to 1,541.14.
Mini S&P futures was down 1.1% as the Nikkei closed. The dollar was down 0.2% for the day at 109.70 yen.
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 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 dropped 1.7%, Yaskawa Electric declined 3.6% and Komatsu Ltd dropped 1.9%.
DeNA Co 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)