Japan’s Nikkei Falls as Oil Climbs on Prolonged Middle East Conflict

By Junko Fujita

TOKYO, March 12 (Reuters) - Japan's Nikkei share average dropped on Thursday as global oil prices resumed their climb, while concerns grew that the U.S.-Israeli war with Iran could drag on.

The Nikkei .N225 was down 1.3% at 54,323.47, as of 0025 GMT, and the broader Topix .TOPX slipped 1.13% to 3,656.85.

"The market is betting that the war will be prolonged," said Takamasa Ikeda, senior portfolio manager at GCI Asset Management.

"The oil prices rose, and that prompted investors to sell stocks."

Oil prices settled up nearly 5% overnight as fresh attacks on ships in the Strait of Hormuz worsened supply disruption fears, and analysts said the International Energy Agency's proposal for a record release of oil reserves is inadequate to ease those worries.

Japan, which is dependent on the Middle East for around 95% of its oil supplies, said it would release about 80 million barrels of oil from its strategic reserves, equivalent to 45 days of supply, to mitigate global disruptions.

Technology stocks fell, with Advantest 6857.T and SoftBank Group 9984.T losing 2.5% and 3.93%, respectively. Tokyo Electron 8035.T fell 1.53%.

All but one of the Tokyo Stock Exchange's 33 industry sub-indexes dropped, with the real estate sector losing 2.96% to become the worst performer. The mining sector .IMING.T rose 0.85%.

Bucking the broader market trend, shares of heavy machinery maker Kawasaki Heavy Industries 7012.T rose 2.95%, emerging as the Nikkei's top percentage gainer.