Nikkei rises on tech gains; Sony jumps on buyback, Microsoft tie-up

* Nikkei up 1.59%, could post small weekly gains

* Sony jumps 10% on share buyback, Microsoft partnership

* Communication equipment makers gain on rally in U.S. peers

* Investors look to Monday's GDP, sales tax debate

By Hideyuki Sano

TOKYO, May 17 (Reuters) - Japan's Nikkei share average jumped on Friday and looked set to end the week with a slight gain, led by rallies in Sony 6758.T and technology shares, though concerns about U.S.-China tensions kept many investors cautious.

The Nikkei rose 1.56% to 21,391 points by midday. For the week, it was on track to add 0.2 percent.

The broader Topix .TOPX rose 1.59% to 1,561.94, up 0.8% so far this week.

The rally was led by electric machinery .IELEC.T and precision machinery makers .IPRCS.T , which both rose more than 2%.

Sony 6758.T jumped 9.9% after it announced a share buyback and strategic partnership with Microsoft Corp MSFT.O on areas such as streaming games, media and new image sensors. Group 9984.T , a major investor in a whole gamut of U.S. tech firms, gained 3.9%.

Some communication equipment manufacturers rose after upbeat earnings boosted Cisco CSCO.O 6.6%, helping to drive up the Nasdaq Telecommunication index .IXUT 4.2%, the second biggest gain in the past four years.

Some market players suspect those shares were helped by speculation of possible windfalls from Washington's tough stance on China's Huawei, their strongest rival.

NEC 6701.T rose 3.1% while Fujitsu 6702.T gained 1.7%.

On the other hand, Murata Manufacturing 6981.T , a Huawei supplier, extended losses, falling 0.6%. Murata has plunged 19% so far this month.

"I think Japanese share markets will remain capped for now, given the perception that (they) will be susceptible to foreign demand and vulnerable to trade tensions," said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.

Investors also looked to Japan's GDP data due on Monday, which is expected to show the country's economy contracted in the first three months of this year and could prod the government to delay a sales tax hike slated for October.

Japanese corporate earnings have been weaker than expectations as the economy has stagnated.

A case in point was brokerage shares index .ISECU.T , which hit its lowest level since August 2016 before recovering to positive territory.

Industry leader Nomura Holdings 8604.T also hit near-three-year low and last stood up 0.1 percent. (Editing by Kim Coghill)