* SSEC -1.0% pct, CSI300 -1.3% pct

* Yuan weakens sharply, offshore yuan at lowest level since Dec

* Beijing says it will not yield on matters of principle

* China unlikely to use depreciation

By Winni Zhou and Andrew Galbraith

SHANGHAI, May 13 (Reuters) – Chinese shares fell on Monday and the yuan weakened to a four-month low as investors’ hopes for a deal to end an escalating trade war between the United States and China were dashed.

The benchmark Shanghai Composite index was 1% lower at the midday break and the blue-chip CSI300 index lost 1.3%, resuming the previous week’s downward slide.

While they recorded sharp losses for the whole of last week, both indexes had surged more than 3% on Friday, lifted