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* Tariff increase on $200 bln of Chinese goods takes effect
* Two countries holding last-ditch talks in Washington
* Symantec plunges on profit warning, CEO departure
* Indexes down: Dow 0.30%, S&P 0.28%, Nasdaq 0.26% (Updates to open)
By Amy Caren Daniel
May 10 (Reuters) - U.S. stocks fell on Friday, as investors worried over the possibility of a long-drawn-out U.S.-China trade dispute, but hopes that the two sides could still reach a last-minute deal limited losses.
President Donald Trump said he was in "absolutely no rush" to finalize a trade agreement with China, after the United States increased duties to 25% on $200 billion worth of Chinese goods overnight.
But even as Beijing threatened retaliation, negotiators in Washington agreed to stay on for a second day, raising expectations that a deal would be reached.
"Everyone knows that the United States and China are talking, and are looking at the tariffs as a bargaining chip. It's all about leverage and who outmaneuvers whom," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
"In the end Trump will get a deal done, but in the interim we have to put up with his way of doing it. We are going to have a lot of volatility, until we have clarity."
Boeing Co, the single largest U.S. exporter to China, declined 0.7%, while Caterpillar Inc dropped 0.9%.
At 9:40 a.m. ET, the Dow Jones Industrial Average was down 77.76 points, or 0.30%, at 25,750.60. The S&P 500 was down 8.18 points, or 0.28%, at 2,862.54 and the Nasdaq Composite was down 20.37 points, or 0.26%, at 7,890.22.
The spike in tensions has triggered a flight to safety and triggered a 2.8% drop in the S&P 500 so far this week, setting the benchmark index to post its worst weekly decline since December.
Global equities have seen outflows of $20.5 billion in the past week as "trade deal trauma" pushed more money into bonds, Bank of America Merrill Lynch said in a report.
Longer-dated U.S. Treasury yields were hovering at five-week lows due to the trade jitters and tame inflation data.
Technology stocks fell 0.33%, and weighed the most on the S&P, dragged down by shares of iPhone maker and a plunge in Symantec Corp.
The antivirus software maker tumbled 15.2% after issuing a profit warning and unexpectedly announcing that its chief executive officer would step down.
Amid market uncertainty, ride-hailing company Uber Technologies Inc is set to make its market debut after raising $8.1 billion in the largest U.S. IPO since 2014.
Booking Holdings rose 4 percent, the most on the S&P and Nasdaq indexes, after the online travel and restaurant reservation provider reported better-than-expected room bookings in the latest quarter.
Declining issues outnumbered advancers for a 1.47-to-1 ratio on the NYSE and for a 1.62-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and three new lows, while the Nasdaq recorded 14 new highs and 33 new lows. (Reporting by Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila)