* Murata, TDK, Taiyo Yuden, Tokyo Electron, TDK underperform
* SoftBank Group rises after T-Mobile deal for Sprint gets boost from FCC
By Ayai Tomisawa
TOKYO, May 21 (Reuters) - Japan's Nikkei slipped on Tuesday as Washington's blacklisting of Huawei Technologies Co Ltd took a heavy toll on suppliers to the Chinese telecoms equipment maker. The Nikkei fell 0.4% to 21,218.62 at the midday break.
Since the White House added Huawei to a trade blacklist last week, several global companies have suspended business with the world's largest telecom equipment maker.
"We are worried that the move by the U.S. would lead to a further deterioration of trade tensions between the United States and China. If the trade worries drag on, Japanese companies' earnings in the second half will also likely be hit," said Nobuhiko Kuramochi, a strategist at Mizuho Securities.
The electric machinery sector tumbled 1.6%, underperforming the overall market. Murata Manufacturing shed 1.7%, TDK Corp tumbled 2.7%, while Tokyo Electron and Taiyo Yuden each slumped 2.9% and Hitachi High-Technologies dropped 2.4%.
According to Mizuho securities, sales to Huawei is estimated to account for about 6-8% at these suppliers.
Other cyclical stocks also lost ground, with shippers Mitsui OSK Lines down sharply by 4.4% and Kawasaki Kisen also losing 4.1%.
SoftBank Group Corp, which has a stake in Sprint Corp, soared 3% after news that T-Mobile US Inc's $26 billion acquisition of rival Sprint appeared to win the support of a majority of the Federal Communications Commission on Monday.
Domestic-demand sensitive stocks outperformed as investors stayed defensive. Realtor Mitsui Fudosan rose 1.1%, while drugmaker Daiichi Sankyo gained 1.2%.
The broader Topix dropped 0.6% to 1,546.35. Declining issues outnumbered advancing ones 1,514 to 546. (Editing by Shri Navaratnam)