Nikkei retreats as investors nervous before Trump-Xi meeting

* Nikkei falls 0.3%, Topix eases 0.1%; cyclicals lead losses
* Trump, Xi to hold trade talks in Japan on Saturday
* BOJ's "tankan" survey due out on Monday

By Tomo Uetake and Ayai Tomisawa
TOKYO, June 28 (Reuters) - Tokyo stocks fell on Friday as
investors turned cautious ahead of much awaited talks between
U.S. and Chinese leaders on the sidelines of the G20 summit in
Japan, with cyclical shares retreating before the weekend.
The benchmark Nikkei average .N225 dropped 0.3% to
21,275.92 points, having risen 1.2% on Thursday after a South
China Morning Post report raised hopes Washington and Beijing
might make progress in talks. For June, the Nikkei rose 3.3% for the first monthly gain
since April, though it was almost flat for the week.
U.S. President Donald Trump said on Wednesday a trade deal
with Chinese President Xi Jinping was possible this weekend but
he is prepared to impose U.S. tariffs on most remaining Chinese
imports if the two countries don't agree. White House economic adviser Larry Kudlow told Fox News on
Thursday that Trump's decision on whether to impose new tariffs
on a $300 billion list of nearly all remaining Chinese imports
will depend on the outcome of Saturday's meeting at the western
Japanese city of Osaka. Traders say investors unwound their positions in cyclical
stocks ahead of the weekend and the Bank of Japan's closely
watched "tankan" survey, due on Monday.
"Even if the two countries could reach a positive agreement,
Japanese equities would benefit little. Expectations in the
market are that the U.S. will ease their monetary policy, which
would make the dollar pressured against the yen," said Isao
Kubo, an equity strategist at Nissay Asset Management.
"Whether the yen strengthens or not is also of investor
concern."
The yen's sustained strength against the dollar JPY=EBS
and weak Chinese stocks also weighed on sentiment.
Exporters, which led the gains the previous day, lost
ground. Daikin Industries 6367.T shed 2.4%, while Nissan
Motors 7201.T dropped 0.8% and Nikon Corp 7731.T slipped
1.0%.
Bucking the overall weakness, some defensive shares were in
demand. Tokyo Gas 9531.T climbed 0.9%, while Astellas Pharma
4503.T added 0.7% and Otsuka Holdings 4578.T rose 0.5%.
The broader Topix .TOPX eased 0.1% to 1,551.14.