* Nikkei surges 5% to a one-month high

* Yield on benchmark JGBs falls 3.5 basis points

* AI-related stocks among the biggest gainers, oil firms

drop

(Recasts and writes through, adding bond, yen moves and analyst

comments)

By Rocky Swift and Satoshi Sugiyama

TOKYO, April 8 (Reuters) - Japan's blue-chip share

average soared 5% to a one-month high while the nation's bonds

and currency rallied on Wednesday as the U.S.-Iran ceasefire

agreement drove crude oil prices sharply lower and eased

concerns of an economic slowdown.

The Nikkei 225 Index jumped to 56,127.92, rising for

a fourth day to its highest since March 5.

The yield on the benchmark Japanese government bond (JGB)

fell 3.5 basis points (bps) to 2.370% after

hitting a 27-year high on Tuesday.

More than five weeks after the U.S. and Israel began aerial

bombardments of Iran, U.S. President Donald Trump said he had

agreed to a two-week ceasefire just before a deadline he had set

for Tehran to reopen the critical oil shipping lane of the

Strait of Hormuz.

Iran's Supreme National Security Council portrayed the deal

as a victory, claiming Trump had accepted Iran's conditions for

ending hostilities.

Pakistan's role as an intermediary between the U.S. and Iran

gives the agreement a degree of credibility, contributing to

market optimism, said Shingo Ide, chief equity strategist at NLI

Research Institute.

"Pakistan reportedly asked Iran to lift the closure of the

Strait of Hormuz, and it seems that the blockade was in fact

lifted," Ide said. "There is growing hope that, if things

continue this way beyond those two weeks, it could effectively

transition into a real ceasefire."

U.S. crude futures sank more than 19% at one point, while

the yen strengthened to a one-week high of 158.4 per dollar.

Japan's economy is particularly vulnerable to oil prices because

of its heavy reliance on imported energy.

JGB yields have surged as the crisis dragged on as concerns

mounted that inflation pressures will spur the Bank of Japan to

accelerate rate hikes and compel the government to expand

stimulus. Interest rate swaps on Wednesday pointed to a near 52%

chance of a BOJ interest rate increase this month, down from

about 60% earlier this week, LSEG data showed.

Companies related to chips and the artificial intelligence

sector, which has enormous energy demands, were the sharpest

gainers among Japanese equities. Among Topix subsectors, mining

and shipping were the sharpest decliners.

On the Nikkei, Furukawa Electric ( FUWAF ) led advancers with

a 16.1% surge, followed by chipmaker Kioxia Holdings ( KXHCF ),

which added 15.6%. SoftBank Group, a major investor in

AI, jumped 5.8%.

Oil explorer Inpex ( IPXHF ) sank 6.3%, leading decliners,

followed by Idemitsu Kosan ( IDKOF ), down 4.1%, and shipping

line Kawasaki Kisen, which sank 3.9%.

"Given it remains unclear whether crude prices and supply

will return to pre-conflict levels, caution will persist

regarding how long oil prices will remain elevated," said Maki

Sawada, an equities strategist at Nomura Securities.

"Given this lingering uncertainty, I believe there is a

strong possibility of a pullback following this sharp rise."