Japan's Nikkei poised for fourth weekly loss as Mideast war spurs risk-off mood

By Satoshi Sugiyama

TOKYO, March 27 (Reuters) - Japan's Nikkei share average fell on Friday, and was on track for a fourth straight weekly decline, as fading hopes for an imminent ceasefire in the U.S.-Israeli war with Iran dampened market optimism and pushed investors into risk-off mode.

The Nikkei .N225 was down 1% at 53,077.94, as of 0141 GMT, after sliding as much as 2% earlier in the session, losing 0.6% so far this week. The broader Topix .TOPX shed 0.3% to 3,631.87.

"Markets appear to be reacting to deep uncertainty over how talks aimed at securing a ceasefire between the United States and Iran will unfold," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

Japan's economy remains highly exposed to spikes in crude oil prices due to its heavy reliance on imported energy. The closure of the Strait of Hormuz weighs heavily on Japan, which gets around 90% of its oil shipments via the passage.

U.S. President Donald Trump said he will pause attacks on Iran's energy plants for 10 days at Tehran's request, adding that talks with Iran were going "very well."

An Iranian official, however, dismissed Washington's proposal to end the conflict as "one-sided and unfair," clouding prospects for de-escalation.

On the Nikkei index, 110 stocks advanced, while 113 declined.

Leading the decline was cables and components manufacturer Furukawa Electric 5801.T, which fell 7.8% after a three-day winning streak. Air conditioning systems leader Daikin Industries 6367.T slumped 7.7% and Sumitomo Electric 5802.T lost 6.9%.

Artificial intelligence-related stocks were also down. Chip-testing equipment maker Advantest 6857.T fell 3.8% to drag the Nikkei the most.

The key gauge's biggest percentage gainers were cosmetics maker Shiseido 4911.T, up 5.6%, followed by flea market app operator Mercari 4385.T gaining 3.8% and medical endoscopes and optics company Olympus 7733.T adding 3.5%.