TOKYO, May 25 (Reuters) - Japan's Nikkei share average

surged past the 65,000 level for the first time on Monday, as

optimism for a deal to end the war in Iran boosted demand for

risk assets.

The benchmark Nikkei 225 Index rose 2.71% to

65,055.68 in early trade. The broader Topix climbed 1.5%

to 3,950.91.

Japan's dependence on imported energy has made its economy

vulnerable to a surge in oil prices caused by the nearly

three-month conflict between the United States, Israel, and

Iran.

U.S. President Donald Trump said over the weekend that

Washington and Iran had "largely negotiated" a memorandum of

understanding on a peace deal that would reopen the Strait of

Hormuz shipping lane for petroleum. He later said he had told

his representatives not to rush into any deal.

There were 139 advancers on the Nikkei index against 86

decliners.

(Reporting by Rocky Swift in Tokyo; Editing by Subhranshu Sahu)