TOKYO, Aug 28 (Reuters) - Japanese shares rose sharply on Monday, as investors bought back stocks after losses at the end of last week, while tourism-related shares dragged lower amid worries about impact of a ban on the country's products by China.

The Nikkei jumped 1.68% to 32,154.03 by the midday break, after falling 2.05% on Friday.

The broader Topix was up 1.36% to 2,297.27.

"Short-term investors bought back stocks after the sharp declines on Friday and also gains on Wall Street in the previous session underpinned sentiment," said Takehiko Masuzawa, trading head, Phillip Securities Japan.

U.S. stocks ended higher on Friday as investors digested Federal Reserve Chair Jerome Powell's comments that the Fed might need to raise interest rates further to ensure inflation was contained.

Uniqlo-owner Fast Retailing rose 1.57% to become the biggest boost on the Nikkei. Air-conditioning maker Daikin Industries jumped 4.15%.

Toyota Motor gained 1.98% to boost the Topix index the most.

Tourism related shares fell amid worries over a decline in spending by Chinese tourists in Japanese goods and services.

After the release of treated radioactive water from a wrecked nuclear power plant into the Pacific Ocean, China announced a blanket ban on all seafood imports from Japan.

"China's ban (on Japanese seafood imports) could become a big drag on the Japanese stocks, depending on how big this issue could become," Masuzawa said.

The move followed a recent return of Chinese group tours in Japan, which raised expectations for boosting their consumption in Japan.

Department store operator J.Front Retailing fell 4.69% to become the worst performer on the Nikkei. Its peers Isetan Mitsukoshi Holdings lost 3.89% and Takashimaya slipped 3.84%.

Cosmetics maker Shiseido lost 1.71%.

Among the 33 sub-indexes on the Tokyo Stock Exchange, the airline sector, retailers' index and the railway sector fell, with airliners losing 1.47% to become the worst performer.

(Reporting by Junko Fujita; Editing by Rashmi Aich)