(Updates prices)

By Satoshi Sugiyama

TOKYO, March 3 (Reuters) - Japan's Nikkei share average

fell on Tuesday, as investors remained on edge for a second

straight day following the U.S.-Israeli strikes on Iran.

The Nikkei fell 1.2% to 57,384.38 as of 0135 GMT

while the broader Topix also shed 1.2% to 3,850.48.

"Ongoing gains in crude oil futures on worsening Middle East

tensions, together with a stronger U.S. dollar and weaker yen,

are fuelling views that inflation could accelerate," said Maki

Sawada, a strategist at Nomura Securities.

"This uncertainty, seen as potentially impacting future

monetary policy, is weighing on the equity market overall."

The U.S.-Israeli air war against Iran escalated with no end

in sight, as Israel struck Lebanon in response to Hezbollah

attacks and Tehran continued launching missiles and drones at

Gulf states hosting U.S. military bases.

The transport equipment and the oil and coal

sectors slipped 3.9% each.

Toyota Motor ( TM ), the world's largest automaker by

sales, slipped 5.5%, while Japan's largest airline ANA Holdings ( ALNPF )

lost 2.2%.

ENEOS Holdings ( JXHGF ), Japan's biggest refiner, lost 4.3%,

the sharpest drop since November last year.

The largest percentage decliner, though, had nothing to do

with the Middle East tensions.

Sumitomo Pharma ( DNPUF ) tanked 15% as investor concerns

over a new share issuance outweighed an upward revision to its

full-year net profit forecast for the current fiscal.

There were 194 decliners on the Nikkei index against 30

advancers.