TOKYO, March 27 (Reuters) - The yield on Japan's 10-year

government bond hit a more than 15-year high on Thursday amid

expectations of an interest rate hike by the Bank of Japan

(BOJ), while those on longer-dated bonds fell after a

better-than-expected auction.

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

to 1.59%, its highest level since October 2008. The two-year JGB

yield was flat at 0.88% and the five-year yield

was up 0.5 bp to 1.185%, its highest since October

2008.

The BOJ kept interest rates steady last week but warned of

heightening global economic uncertainty, suggesting the timing

of further rate hikes will depend largely on the fallout from

potentially higher U.S. tariffs.

The yields, which move inversely to prices, also rose due to

a lack of demand at the end of Japan's fiscal year in March,

strategists said.

"Those yields could have fallen today because Washington's

announcement to impose a 25% tariff on automobile imports could

hurt the economy, which will make it difficult for the BOJ to

raise rates," said Katsutoshi Inadome, senior strategist at

Sumitomo Mitsui Trust Asset Management.

After its policy meeting last week, the BOJ listed the

impact of trade policies as a potential risk for the outlook.

U.S. President Donald Trump on Wednesday unveiled a 25%

tariff on imported vehicles, expanding a global trade war and

prompting criticism and threats of retaliation from affected

trading partners.

The 40-year JGB yield slipped 6.5 bps to

2.87% after a better-than-expected auction outcome. The auction

happened after the yield hit 3% for the first time, making them

look cheap, Inadome said.

The 30-year JGB yield fell 2 bps to 2.58%.

The 20-year JGB yield dropped to as low as

2.315% but was last flat at 2.29%.