WASHINGTON (Reuters) - U.S. President Donald Trump and Chinese President Xi Jinping are unlikely to meet before their countries' March 1 deadline to reach a trade deal, two U.S. administration officials and a source familiar with the negotiations said on Thursday.

White House economic adviser Larry Kudlow told reporters on Thursday that the leaders of the two economic superpowers could still meet later.

"At some point the two presidents will meet, that is what Mr. Trump has been saying. But that is off in the distance still at the moment," he said.

The news that the two leaders were now unlikely to meet spurred a sharp selloff in U.S. stocks, dashing the optimism that had been building that the countries were progressing toward a deal before tariffs on Chinese imports rise to 25 percent after the March 1 deadline. The S&P 500 Index tumbled to its low of the day, down 1.6 percent in its biggest drop in more than a month. Treasury bond yields dropped as investors sought safety in sovereign U.S. debt. The benchmark 10-year yield slid 4 basis points to 2.66 percent, the lowest in nearly a week.

"I could see where that would impact the markets because obviously we had a lift in the month of January from optimism surrounding these trade talks," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "It does make sense the market is pulling back somewhat on that."

(Reporting by Steve Holland and Jeff Mason; Additional reporting by Alexandra Alper; Writing by Lisa Lambert; Editing by Doina Chiacu and Alistair Bell)

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