* Market optimistic on show of U.S-Japan friendship - analyst
* Volumes may stay thin due to a holiday in the U.S.
By Ayai Tomisawa
TOKYO, May 27 (Reuters) - Japan’s Nikkei edged up on Monday morning, helped by Wall Street’s Friday gains, while the market awaited the outcome of trade talks between the leaders of Japan and United States.
The Nikkei share average added 0.3% to 21,181.80 at the midday break. Hit by intensifying U.S.-China trade frictions, the benchmark index has dropped 5% this month.
The market’s direction is expected to rely on the outcome of the trade talks, while volume may stay subdued with fewer traders in the market as U.S. markets are closed on Monday for a holiday, analysts said.
On Monday, President Donald Trump and Prime Minister Shinzo Abe will hold formal talks. A joint news conference will be held from 0500 GMT.
The two leaders golfed and attend a sumo tournament, putting on a show of friendship meant to demonstrate the strength of the U.S.-Japan alliance, but they have policy disagreements over trade.
Trump has threatened to target Japanese automakers with high tariffs in his effort to cut trade surpluses with other countries.
“The market seems to stay positive about the trade talks after seeing headlines suggesting their friendly relationship over the weekend,” said Ryohei Yoshida, a senior technical analyst at Daiwa Securities.
The market focus is on tariffs on autos, while they are optimistic about the developments after Trump tweeted about a progress in the Japan-U.S. talks, Yoshida said.
“Great progress being made in our trade negotiations with Japan. Agriculture and beef heavily in play,” Trump tweeted after arriving back in Tokyo from the suburban golf course where the two played.
“Much will wait until after their July elections where I anticipate big numbers.”
Index-heavy names such as Fast Retailing and SoftBank Group Corp advanced on Monday, up 1.1% and 1.8%, respectively.
Exporters were in demand. Sony Corp rose 0.9%, Subaru Corp gained 1.8% and Hitachi Ltd soared 1.7%.
The broader Topix added 0.4% at 1,546.90. (Editing by Richard Borsuk)