TOKYO, June 2 (Reuters) - Japan's Nikkei share average

retreated on Tuesday from a record high hit in the previous

session, as investors cautiously assessed Middle East peace

talks, with broader geopolitical uncertainties weighing on risk

appetite.

The Nikkei was down 1.46% at 65,991.21, as of 0146

GMT, while the broader Topix slipped 1.18% to 3,894.29.

The Nikkei touched a record peak of 67,231.28 on Monday and

posted a record closing high of 66,934.33, roughly 7% above the

25-day moving average, a sign of an overheated market.

"There was a caution for the Nikkei's sharp rally, and the

optimism for the early end of the Middle East conflict weakened

and the oil prices rose," said Daisuke Hashizume, senior

strategist at Daiwa Securities.

Oil prices held on to most of the previous session's sharp

gains in early trade on Tuesday on uncertainty over the status

of ceasefire talks between the United States and Iran and the

potential reopening of the Strait of Hormuz.

U.S. President Donald Trump said on Monday that talks with

Iran were ongoing, while Tasnim news agency reported that Tehran

had suspended indirect negotiations with Washington.

In Japan, AI-related shares came under pressure, with

heavyweight investor SoftBank Group down 1.3%.

Fibre-optic cable maker Fujikura tumbled 5.64% on broad-based

selling in technology-linked names.

Shares of memory-chip maker Kioxia ( KXHCF ) erased early

gains to trade 1.5% lower as investors turned cautious ahead of

a scheduled investor meeting later in the day.

Energy stocks bucked the trend, tracking gains in oil

prices, with Inpex ( IPXHF ) climbing 5.1%.

The mining sector jumped 4.35% to become the

Tokyo Stock Exchange's (TSE) top-performing sector, while

shipping firms rose 1% on expectations for firmer

freight rates.

Of the nearly 1,500 stocks trading on the TSE's prime

section, 20% rose, 77% fell and 2% traded flat.