US STOCKS-Wall Street drops as trade tensions spike

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* China delegates scrap U.S. farm visit, indexes fall

* Trade-sensitive tech sector drops

* Netflix drags after CEO comments

* Indexes fall: Dow 0.47%, S&P 0.51%, Nasdaq 1.01% (Updates to midday)

By Ambar Warrick and Medha Singh

Sept 20 (Reuters) - The Wall Street's main indexes dropped on Friday, after the Montana Farm Bureau said Chinese agriculture officials who were due to visit U.S. farm states next week canceled their trip, dampening optimism on U.S.-China trade talks.

The cancellation came as trade talks were held in Washington and U.S. President Donald Trump said he wanted a complete trade deal with the Asian nation, not just an agreement for China to buy more U.S. agricultural goods.

"It's trade related and markets are just hyper-sensitive to trade," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Recent signs of easing trade worries had supported the markets, bringing the S&P 500 just shy of its all-time high hit in July. Now it stands 1.2% away from that level.

Seven of the 11 major S&P sectors were lower with tariff-sensitive technology stocks losing the most, down 1.27%. The Philadelphia chip index fell 1.67%.

"It doesn't look like China would be openly willing to give concessions that the United States is looking for unless ... there is some indication from the U.S. that there is some interest in taking those tariffs off," said Liz Ann Sonders, chief investment strategist at Charles Schwab.

At 1:49 p.m. ET, the Dow Jones Industrial Average was down 128.44 points, or 0.47%, at 26,966.35, the S&P 500 was down 15.33 points, or 0.51%, at 2,991.46. The Nasdaq Composite was down 82.67 points, or 1.01%, at 8,100.21.

Before news of the farm visit cancellation broke, the S&P 500 and Dow Industrials were edging higher, supported by gains in healthcare stocks, while a drop in shares of Netflix Inc kept the Nasdaq firmly in the red.

Netflix slipped 7% after CEO Reed Hastings' comments underscored growing costs and rising competition from Walt Disney Co, Apple Inc and other video streaming services.

Adding to Netflix's woes, Evercore ISI said recent data painted an uncertain picture of the company's international subscriber growth.

The S&P 500 healthcare index, which has been the worst performing S&P sector this year, clocked the biggest gain among the 11 major sectors.

Merck & Co gained 1.5% as the company's drugs Pifeltro and Delstrigo received FDA approval for use in certain adult patients with HIV-1 who are "virally suppressed".

Roku Inc tumbled 21.7% after Pivotal Research started coverage of its shares with a "sell" rating.

Chipmaker Xilinx Inc dropped 6.8% as Chief Financial Officer Lorenzo Flores said he would step down, prompting Bank of America Merrill to downgrade its stock to "neutral".

Markets are likely to be volatile towards the end of the session due to "quadruple witching", where investors unwind positions in futures and options contracts before they expire.

Advancing issues outnumbered decliners for a 1.02-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.32-to-1 ratio on the Nasdaq.

The S&P index recorded 21 new 52-week highs and no new low, while the Nasdaq recorded 30 new highs and 36 new lows. (Reporting by Ambar Warrick and Medha Singh in Bengaluru; Editing by Anil D'Silva and Shounak Dasgupta)