* Fast Retailing takes more than 100 points off from Nikkei
* Subaru tumbles after report it may cut earnings forecast
* Analysts cautious before U.S. midterm elections Tues
By Ayai Tomisawa
TOKYO, Nov 5 (Reuters) - Japan's Nikkei fell on Monday morning as budding hopes of a resolution to the U.S.-China trade war faded, while shares of index-heavy Fast Retailing tumbled after dismal monthly sales data.
The Nikkei share average dropped 1.4 percent to 21,934.41 in midmorning trade, pulling back from a two-week high on Friday when investors cheered signs that Beijing and Washington were seeking to resolve their trade row.
Those hopes were dashed after White House economic adviser Larry Kudlow, speaking on CNBC, contradicted a report earlier in the day that had suggested the White House was taking steps to work out a deal.
Analysts said that weakness in Chinese shares is also dimming the mood, while investors were generally cautious ahead of U.S. congressional midterm elections on Tuesday.
"Depending on the result of the midterm elections, the market can be volatile so investors are not taking large positions," said Hiroyuki Fukunaga, chief executive of Investrust.
Opinion polls show strong chances that Democrats may win control of the House of Representatives in the elections after two years of wielding no practical political power in Washington, with President Donald Trump's Republican Party likely to keep the Senate.
Fast Retailing tumbled 5 percent and sliced more than 104 points off the Nikkei benchmark index, after the operator of Uniqlo clothing said its October domestic same-store sales dropped 10 percent on the year hit by weak winter clothes sales on unseasonably warm weather.
Hitachi Chemical Co dived 8.1 percent after the company on Friday said it found improper tests were conducted on nearly 30 more products, accounting for about a tenth of revenues.
Subaru Corp fell 5 percent after the Nikkei business daily reported that the automaker may cut its full-year forecast when it releases its first-half earnings on Monday. The company said it will delay the timing to announce its results to 0600 GMT from an initially planed 0400 GMT.
Other automakers were also in the red, with Toyota Motor Corp dropping 1.3 percent and Nissan Motor Co shedding 1.2 percent.
Electric components makers lost ground, with TDK Corp tumbling 3.9 percent and Murata Manufacturing sliding 2.0 percent.
Bucking the broader market, financial firms, which invest in high-yielding products, outperformed after U.S. yields rose on a healthy jobs report, pointing to further labor market tightening.
Dai-ichi Life Holdings rose 0.3 percent, T&D Holdings advanced 0.5 percent while Sumitomo Mitsui Financial Group was flat.
The broader Topix dropped 1.0 percent to 1,641.61. (Editing by Shri Navaratnam)