By Rocky Swift

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 .N225 rose 2.71% to 65,055.68 in early trade. The broader Topix .TOPX 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.