(Updates with details and closing prices)

By Satoshi Sugiyama

TOKYO, March 13 (Reuters) - Japan's Nikkei closed lower

on Friday and posted a second consecutive weekly decline of

3.2%, as escalating tensions in the Middle East fuelled

inflation concerns and prompted investors to dump riskier

assets.

The Nikkei dropped 1.2% to close at 53,819.61 on

Friday, after sliding as much as 2.1% earlier in the session.

The index has lost 8.5% since its February 27 close, before the

U.S.-Israeli war with Iran erupted. The broader Topix

eased 0.6% to 3,629.03.

"Although crude oil prices have retreated slightly from

their recent peak, they remain well above levels seen before the

conflict began," Shutarou Yasuda, market analyst at Tokai Tokyo

Intelligence Laboratory, said in a report. "Risks of turbulence

in equity markets are likely to persist next week, depending on

the news flow."

Brent futures for May edged 0.04% lower to $100.42 a

barrel by 0615 GMT. U.S. West Texas Intermediate (WTI) crude for

April CLc1 was down 0.6% at $95.12 a barrel.

The conflict has dampened sentiment in Japan markets, which

had been driven by strong corporate earnings and expectations of

expansionary fiscal policy after Prime Minister Sanae Takaichi

won a snap election.

In the Nikkei index, there were 72 advancers and 152

laggards.

Technology shares dragged on the benchmark, with SoftBank

Group slipping 4.5% and chip-testing equipment maker

Advantest ( ADTTF ) down 3.5%.

Honda Motor ( HMC ) dropped 5.6%, its steepest percentage

drop since February 2025, after Japan's second-largest automaker

said it would post its first annual loss in almost 70 years as a

listed company over up to $15.7 billion in restructuring costs

tied to its electric-vehicle business.

Bucking the broader trend, energy-related shares rose, with

the Tokyo bourse's energy explorers index, the best

percentage gainer among its 33 sub-indexes, up 2.1%. Shares of

Inpex ( IPXHF ), Japan's largest oil and gas explorer, added 2%.