Updates with closing prices

TOKYO, May 18 (Reuters) - Japan's Nikkei share average closed lower on Monday for a third consecutive day, as a global bond market selloff and escalating tensions in the Middle East weighed on risk appetite.

The benchmark Nikkei 225 Index .N225 fell 1% to close at 60,815.95, while the broader Topix .TOPX slid 0.97% to 3,826.51.

Investor sentiment weakened after major Wall Street indexes closed lower on Friday, led by declines in artificial intelligence-related stocks.

Meanwhile, yields on Japanese government bonds soared on Monday, extending the global fixed-income market selloff on concerns the Iran war could fuel inflationary pressures.

Reports of drone incursions in the United Arab Emirates and Saudi Arabia further heightened geopolitical concerns. U.S. President Donald Trump warned that Iran must act "fast" as diplomatic efforts to end the conflict appeared to stall.

"Investors reacted negatively to the drop in the three major U.S. indexes and the rise in Japan's 10-year bond yield," said Maki Sawada, an equities strategist at Nomura Securities.

"Following Friday's trend, today's market is being influenced by sectors such as semiconductors, AI-related stocks, and large-cap stocks."

"The difficulty in the U.S.-Iran ceasefire negotiations remains a source of concern," Sawada said.

In the Nikkei, there were 62 advancers against 160 decliners. The largest losers were Marui Group 8252.T, down 8.5%, followed by Nikon 7731.T, which slipped 7.9%, and Subaru 7270.T, which slid 7.1%.