TOKYO, April 1 (Reuters) -

Japanese government bond (JGB) yields rose on Monday amid a

cautious mood, as investors eyed a key bond auction and the Bank

of Japan's first bond purchase operation of the new fiscal year.

The 10-year JGB yield climbed to a little

more than a one-week high of 0.745% ahead of an auction for the

bond on Tuesday. It was last up 1.5 basis points (bps) at

0.740%.

Attention is on the BOJ's first bond buying of the new

fiscal year on Wednesday, with investors "keenly" watching for

changes to the offer amount, said Naka Matsuzawa, chief macro

strategist at Nomura.

While the BOJ said at its March policy meeting that the

monthly purchase amount would stay roughly the same, it scaled

back the upper bound of its purchase range for the April-June

period.

Matsuzawa expects the central bank to gradually set the

purchasing amount toward the lower end of its offer range in

this period. Policymakers could then decide on reducing monthly

purchases at a later meeting, depending on how hawkish a message

it wants to send.

"That's going to be a very strong step toward balance sheet

runoff" when the BOJ does reduce overall purchases, he said.

BOJ Governor Kazuo Ueda said the central bank will

eventually scale back bond purchases.

The central bank has been an aggressive bond buyer to defend

its ultra-low rate policy. That has pushed its ownership to more

than half the market, putting a squeeze on liquidity and

impairing market function.

The BOJ's outright purchase of JGBs was 87.5809 trillion yen

($578.55 billion) in the fiscal year through March, a filing

showed on Monday, down from the previous year's record 135.989

trillion yen.

The total purchases in March stood around six trillion yen,

largely unchanged from February.

The 20-year yield rose 2.5 bps to 1.515%,

while the 30-year yield was up 2 bps at 1.830%.

Both stood around two-week highs.

The five-year yield ticked up 1.5 bps to

0.365%.

($1 = 151.3700 yen)

(Reporting by Brigid Riley; Editing by Varun H K)