TOKYO, Aug 3 (Reuters) - Japan's short-dated bond yields

rose on Monday as investors increased bets on an early Bank of

Japan interest rate hike after Japan and the United States

conducted coordinated yen-buying intervention to support the

currency.

The five-year yield rose 2.5 bps to a record

2.050%. The two-year yield, the one most sensitive

to BOJ policy, rose 3.5 bps to 1.54%, its highest since May

1995. Yields move inversely to bond prices.

"Japan and the U.S. conducted joint currency intervention,

which means Japan is under pressure to support the yen with

fundamentals this time, such as with monetary policy," said

Rinto Maruyama, senior strategist of FX and rates at SMBC Nikko

Securities.

Japan and the United States conducted coordinated yen-buying

intervention and will not hesitate to take further action,

Japan's finance ministry said, confirming a rare bilateral

action to halt the yen's slide to fresh 40-year lows.

A widening rate differential with the U.S., where the

Federal Reserve has dramatically shifted to a more hawkish

stance, has been a key factor in the dollar's rise against the

yen.

The BOJ on Friday kept its policy rate steady, but warned

for the first time that underlying inflation could exceed its

target and said future policy discussions would focus on upside

price risks.

"The bond yields did not react to BOJ Governor (Kazuo)

Ueda's comments during his press conference on Friday, which

means his comments were short of market expectations for early

rate hike as early as September," Maruyama said.

(Reporting by Junko Fujita; Editing by Subhranshu Sahu)