TOKYO, March 23 (Reuters) - Japan's Nikkei share average

fell 4% on Monday as concerns about escalation of the Middle

East war stoked inflation fears and the potential for higher

interest rates globally.

The Nikkei was down 3.8% to 51,340.02 as of 0018 GMT

and the broader Topix fell 3.36% to 3,488.08.

"If the Strait of Hormuz remains closed for a long time, the

oil prices would rise further and speed up inflation," said

Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence

Laboratory.

"If the prices rise, global interest rates may be raised,"

he said.

Closure of the Strait of Hormuz would hit Japan hard. The

country gets around 90% of its oil shipments via the strait.

Iran said on Sunday it would strike the energy and water

systems of its Gulf neighbours if U.S. President Donald Trump

followed through with a threat to hit Iran's electricity grid in

48 hours, extinguishing any hope of an early end to the war, now

in its fourth week.

Trump on Sunday said Iran had 48 hours to open the vital

strait, which is effectively closed for most vessels.

Chip-related shares led the Nikkei's decline, with Advantest ( ADTTF )

and Tokyo Electron ( TOELF ) falling 5% and 2.29%,

respectively.