* Tech sector hit by Washington's Huawei ban
* Trading house, oil companies hit by slide in crude prices
* Nikkei on course for 3rd straight week of losses
By Hideyuki Sano
TOKYO, May 24 (Reuters) - Japan's Nikkei share average dropped on Friday, as concerns about escalating tensions between Washington and Beijing over trade and technology firms sapped investor appetite while steep losses in oil prices hit trading houses.
The Nikkei dropped 0.69% to 21,004 by midday and is likely to post its third consecutive week of losses while the broader Topix fell 0.40% to 1,534.36.
"The market mood isn't good. To be sure, there remain hopes that the two countries' relations could suddenly improve, so a lot of investors are taking a wait-and-see stance. But it is hard to deny the situation is deteriorating," said Masayuki Doshida, senior market analyst at Rakuten Securities.
U.S. President Donald Trump said on Thursday U.S. complaints against Huawei Technologies Co Ltd might be resolved within the framework of a U.S.-China trade deal, while at the same time calling the Chinese telecommunications giant "very dangerous."
Panasonic dropped 1.7%, a day after the company said that it stopped shipments of certain components to Huawei to comply with U.S. regulations, although its China website said it continues to supply the Chinese company normally.
Camera maker Canon fell 2.8%.
Electronic parts maker Murata Manufacturing bounced back 1.0% after its fall earlier in the session to 2-1/2-year lows prompted some bargain-hunting. Still, it is down almost 25% so far this month.
Trading house and energy-related shares were badly hit by sharp falls in oil prices on Thursday.
Mitsui Co fell 1.6% while Mitsubishi Corp dipped 0.3% to hit 1-1/2-year lows.
Although oil prices stabilised on Friday amid OPEC cuts and Middle East tensions, energy companies saw heavy selling, with Idemitsu Kosan falling 5.0% and Inpex 4.9%. JXTG Holdings dropped 4.0%.
Oil prices have suffered their steepest losses so far this year as trade tensions fanned worries about a major downturn in the global economy.
On the main board, 52% of shares declined while 42% gained.
Among gainers, Isetan Mitsukoshi rose 3.1% on a media report that the department store operator plans cost-cutting measures and is considering share buybacks. (Editing by Jacqueline Wong)