(Updates with closing levels, adds analyst comment)

By Satoshi Sugiyama

TOKYO, June 17 (Reuters) - Japan's Nikkei share average

closed at a record high for a third straight session on

Wednesday, ending just shy of the 70,000 mark, on easing

concerns over the Middle East conflict and sustained buying in

AI-related shares ahead of the U.S. Federal Reserve's policy

decision.

The Nikkei rose 0.7% to close at 69,902.25 after

touching an intraday high of 70,125.75. The broader Topix

climbed 0.6% to 4,013.23.

Details of a U.S.-Iran interim deal to end the conflict are

emerging, with President Donald Trump saying it would rule out a

nuclear weapon for Tehran and a U.S. official saying it would

allow Iran to sell oil once signed.

Oil prices eased, extending the previous session's declines

as investors assessed the U.S.-Iran peace deal.

"As concerns over geopolitical risk continue to recede from

yesterday, the market still seems to be seeing some buying

driven by expectations for expanding AI demand, particularly in

certain pockets of the market such as high-priced semiconductor

shares and other AI-related stocks," said Maki Sawada, a

strategist at Nomura Securities.

Market breadth remained strong, with 137 stocks advancing

against 85 decliners in the Nikkei.

AI-related shares performed strongly overall, with chip

inspection equipment maker Lasertec ( LSRCF ) jumping 13.2% to

close at a record high. Electronic components maker Murata

Manufacturing ( MRAAF ) rose 3.2%, while industrial robots maker

Yaskawa Electric ( YASKF ) advanced 2.9%.

The biggest percentage decliners were life insurance group

T&D Holdings ( TDHOF ), which fell 3.2%, followed by tech

investment conglomerate SoftBank Group, down 3.1%, and

medical endoscopes and optics company Olympus, which

lost 3%.

The Nikkei briefly crossed the 70,000 mark for the first

time on Tuesday after the Bank of Japan raised interest rates to

1.00%, as widely expected.

Investors will closely watch new Fed Chair Kevin Warsh's

comments on inflation, unemployment and the economic outlook at

his first post-Federal Open Market Committee press conference

later in the day.

The Fed is widely expected to keep interest rates steady.