* Nikkei up 1.59%, could post small weekly gains
* Sony jumps 10% on share buyback, Microsoft partnership
* Communication equipment makers gain on rally in U.S. peers
* Investors look to Monday’s GDP, sales tax debate
By Hideyuki Sano
TOKYO, May 17 (Reuters) - Japan’s Nikkei share average jumped on Friday and looked set to end the week with a slight gain, led by rallies in Sony and technology shares, though concerns about U.S.-China tensions kept many investors cautious.
The Nikkei rose 1.56% to 21,391 points by midday. For the week, it was on track to add 0.2 percent.
The broader Topix rose 1.59% to 1,561.94, up 0.8% so far this week.
The rally was led by electric machinery and precision machinery makers, which both rose more than 2%.
Sony jumped 9.9% after it announced a share buyback and strategic partnership with Microsoft Corp on areas such as streaming games, media and new image sensors.
Softbank Group, a major investor in a whole gamut of U.S. tech firms, gained 3.9%.
Some communication equipment manufacturers rose after upbeat earnings boosted Cisco 6.6%, helping to drive up the Nasdaq Telecommunication index 4.2%, the second biggest gain in the past four years.
Some market players suspect those shares were helped by speculation of possible windfalls from Washington’s tough stance on China’s Huawei, their strongest rival.
NEC rose 3.1% while Fujitsu gained 1.7%. On the other hand, Murata Manufacturing, a Huawei supplier, extended losses, falling 0.6%. Murata has plunged 19% so far this month.
“I think Japanese share markets will remain capped for now, given the perception that (they) will be susceptible to foreign demand and vulnerable to trade tensions,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.
Investors also looked to Japan’s GDP data due on Monday, which is expected to show the country’s economy contracted in the first three months of this year and could prod the government to delay a sales tax hike slated for October.
Japanese corporate earnings have been weaker than expectations as the economy has stagnated.
A case in point was brokerage shares index, which hit its lowest level since August 2016 before recovering to positive territory.
Industry leader Nomura Holdings also hit near-three-year low and last stood up 0.1 percent. (Editing by Kim Coghill)