Nikkei rises on hopes for progress in US-China trade talks at G20

* Companies with large exposure to China in demand

* Japan Display jumps on report Apple will inject $100 mln

TOKYO, June 27 (Reuters) - Japan’s Nikkei rose on Thursday on hopes for progress in U.S.-China trade talks as investors cautiously awaited the outcome of the G20 summit this weekend.

The Nikkei share average ended 1.2% higher at 21,338.17 points.

Overall sentiment improved, with cyclical stocks and companies with large exposure to China in positive territory ahead of a meeting between U.S. and Chinese leaders on the sidelines of the G20 meeting in Osaka.

The South China Morning Post (SCMP), citing sources, said Washington and Beijing were laying out an agreement that would help avert the next round of tariffs on an additional $300 billion of Chinese imports.

U.S. President Donald Trump said on Wednesday that a trade deal with Chinese President Xi Jinping was possible this weekend but he is prepared to impose U.S. tariffs on virtually all remaining Chinese imports if the two countries continue to disagree.

Trump also raised the possibility that he may impose a lower, 10% duty on a $300 billion list of Chinese imports, instead of the proposed 25% rate.

Trump is expected to meet with Xi on Saturday for a conversation that could revive stalled negotiations between the world’s two biggest economies or launch a much deeper, costlier trade war that would drag down global growth and roil financial markets.

“The market’s main concern is whether the two countries land on some kind of deal which will determine the direction of U.S. monetary policy,” said Yoshinori Shigemi, a global market strategist at JPMorgan Asset Management.

Machinery, automakers and tech shares were bought, with Tokyo Electron soaring 3%, TDK Corp jumping 4.1%, Daikin Industries surging 5.3% and Subaru Corp rising 4.5%.

Companies which rely on Chinese demand also gained ground.

Fanuc Corp rose 1.7% and Yaskawa Electric jumped 4.6%.

Japan Display Inc jumped 18% after the Asahi newspaper reported that Apple Inc will inject $100 million into the company.

The broader Topix gained 1.2% to 1,553.27. (Editing by Kim Coghill)