TOKYO, May 18 (Reuters) - Japanese government bond (JGB)

yields surged on Monday, with the benchmark 10-year yield

reaching levels last seen in October 1996, extending a global

debt selloff as pressure mounts on central banks to raise rates

to contain inflation.

The yield on the 10-year JGB climbed 7.5

basis points (bps) to 2.775%, after earlier touching an intraday

high of 2.800%, a level last seen in October 1996.

The yield on the five-year note added 3.5 bps

to 2.020%, and reached an intraday record of 2.025%.

Yields move inversely to bond prices.

JGB yields tracked a sharp rise in U.S. Treasury yields,

which jumped to their highest point in a year on Friday as a

spike in oil prices tied to Middle East disruptions stoked

inflation fears. Yields on Italian and German government bonds

also surged.

Markets increasingly expect the Bank of Japan to hike its

key rate at its June meeting, following a hawkish hold in April.

Reports the government is looking to compile an extra budget to

tackle rising fuel costs have renewed concerns about Japan's

finances, adding to upward pressure on JGB yields.

"Since upward pressure on yields is spreading from JGBs and

UK gilts to Treasuries and eurozone bonds, attention is focused

on whether policymakers in various countries will take action to

curb rising rates," Ataru Okumura, a senior rate strategist at

SMBC Nikko Securities, said in a note.

"The rise in (Japanese) yields accelerated around the middle

of last week following reports of a supplementary budget, but

given that the scale remains unclear at this stage, the JGB

market's reaction is clearly excessive," Okumura said.

The yield on the 20-year JGB advanced 9.5 bps

to 3.735%, the highest since August 1996, according to data from

Japan Bond Trading Company.