(Changes slug, updates prices, adds bonds and currency moves,

analyst comment in paragraphs 3-4)

By Satoshi Sugiyama

TOKYO, June 15 (Reuters) - Japan's Nikkei share average

rallied to an all-time high, while government bond yields

tumbled on Monday, after news that the United States and Iran

had agreed on a framework for a deal to end their war, fuelling

relief across markets.

The Nikkei 225 Index jumped as much as 5.3% to

69,527.88 by 0115 GMT. The broader Topix climbed 3.8% to

4031.19.

"This is simply the market reacting to the ceasefire deal -

nothing more, nothing less. Even a rise of around 4% does not

look unnatural," said Shingo Ide, chief equity strategist at NLI

Research Institute.

"The key issue going forward will be the substance of the

agreement itself, and whether it is actually implemented and

upheld."

Japanese government bond (JGB) yields fell on easing

inflation concerns. The benchmark 10-year JGB yield

fell 7 basis points (bps) to 2.565%, while the

20-year JGB yield slid 7.5 bps to 3.445%.

The two-year yield, the one most sensitive to

Bank of Japan policy rates, decreased 2 bps to 1.39%. Yields

move inversely to bond prices.

The Japanese yen strengthened 0.06% against the

greenback to 160.11 per dollar.

The U.S. and Iran on Sunday agreed to halt the U.S. blockade

of Iran and reopen the Strait of Hormuz, a preliminary pact that

sent oil prices falling but leaves the fate of Iran's nuclear

programme to further negotiations.

The memorandum of understanding is scheduled to be

officially signed on Friday in Switzerland.

Japanese markets have been whipsawed by developments in the

Middle East. Japan, which depends on the region for about 95% of

its oil imports, has seen the yen come under pressure and bond

yields rise amid concerns that higher crude prices would lift

import costs.

The Bank of Japan will hold a two-day policy meeting ending

Tuesday. It is widely expected to raise its policy rate to a

31-year high of 1% and signal its readiness to keep pushing up

borrowing costs.

(Reporting by Satoshi Sugiyama; Editing by Tom Hogue and

Subhranshu Sahu)