TOKYO, April 13 (Reuters) - Yields on Japan's benchmark

government bonds (JGBs) hit a 29-year high on Monday after

U.S.-Iran peace talks collapsed and the U.S. Navy prepared a

blockade of the Strait of Hormuz, sending oil prices sharply

higher and fuelling inflation fears.

The benchmark 10-year JGB yield

rose 5.5 basis points (bps) to 2.490%. Other

tenors were yet to be traded, as of 2350 GMT. Yields move

inversely to bond prices.

"Uncertainty over the outlook for the Middle East situation

remains high, and lingering inflation concerns stemming from a

prolonged rise in crude oil prices are likely to put upward

pressure on JGB yields," Keisuke Tsuruta, a senior bond

strategist at Mitsubishi UFJ Morgan Stanley Securities, said in

a note.

U.S. President Donald Trump said on Sunday the U.S. Navy

would start blockading the Strait of Hormuz, raising the stakes

after marathon talks with Iran failed to reach a deal to end the

war, jeopardising a fragile two-week ceasefire.

(Reporting by Satoshi Sugiyama; Editing by Subhranshu Sahu)