TOKYO, Dec 12 (Reuters) - Japanese government bond

yields fell across the curve on Thursday due to receding

expectations that the Bank of Japan will raise interest rates at

its meeting next week.

The 10-year JGB yield fell 1 basis point (bp)

to 1.055%. The five-year yield dropped 0.5 bp to

0.725%.

The two-year yield, the most sensitive to the

BOJ's policy rate, retreated 0.5 bp to 0.58%.

"The market is now seeing it is less likely that the BOJ

would raise rates at its policy meeting next week following a

series of media reports about it," said Keisuke Tsuruta, senior

fixed income strategist at Mitsubishi UFJ Morgan Stanley

Securities.

The BOJ is leaning toward keeping interest rates steady as

policymakers prefer to spend more time scrutinising overseas

risks and clues on next year's wage outlook, Reuters reported on

Thursday.

That followed a Bloomberg news report on Wednesday that said

the BOJ sees "little cost" in waiting to hike rates.

The BOJ will hold its final policy meeting for the year on

Dec. 18-19, when the nine-member board will deliberate whether

to raise short-term rates from the current 0.25%.

Swap rates indicated a 25.3% chance for a 25-bps increase

next week and a 69% chance of that move in January.

The 20-year JGB yield fell 1 bp to 1.850%.

The 30-year JGB yield fell 1.5 bps to 2.240%.

The 40-year JGB yield fell 1.5 bps to 2.595%.