TOKYO, Aug 15 (Reuters) - Japanese government bonds slid

on Friday, pushing benchmark yields to a two-week high, after

overnight losses in U.S. Treasuries and as traders evaluated

pressure on the central bank to raise interest rates.

Demand for safer assets also diminished as domestic shares

rallied and data showed Japan's economy grew much faster than

expected in the second quarter.

The yield on the 10-year JGB rose 1 basis

point (bp) to 1.56% after earlier touching 1.565%, the highest

since July 31. Futures for the bonds fell 0.06 yen to

137.91.

JGBs fell on Thursday following comments by U.S. Treasury

Secretary Scott Bessent that the Bank of Japan will likely be

raising interest rates as it is behind the curve in dealing with

the risk of inflation. Japan's economy minister Ryosei Akazawa

said on Friday Bessent's comments were not a call for action by

the BOJ.

"We think the Bank will pursue discussions with an eye to

raising rates, possibly by the end of the year," Yusuke Matsuo,

senior market economist for Mizuho Securities, wrote in a note.

"If the BOJ maintains this stance, we do not think the Trump

administration will express an active intention to intervene

against the Bank or the Japanese government."

U.S. Treasury yields rose on Thursday after data showed that

producer prices increased more than expected in July. Japan has

key inflation data due next week that will feed into rate

expectations for the BOJ.

Data on Friday showed Japan's economy expanded at an

annualised rate of 1% in the April-June quarter, beating

forecasts. Analysts expect the full impact of U.S. tariffs on

growth to emerge later.

The 20-year yield rose 1 bp to 2.56%, while

the 30-year JGB yield rose 1.5 bps to 3.1%.