TOKYO, July 19 (Reuters) - Japanese government bond

yields retreated slightly on Friday as investors gauged the

outlook for interest rates at home and in the United States

ahead of key central bank meetings at the end of the month.

The 10-year JGB yield slipped 0.5 basis point

(bp) to 1.030% as of 0510 GMT.

Between Wednesday and Thursday, the benchmark yield had

swung from as low as 1.005% to as high as 1.060% after Japanese

Digital Minister Taro Kono said in an interview with Bloomberg

that the Bank of Japan needed to raise interest rates to support

the yen.

The BOJ next sets policy on July 31, with the Federal

Reserve doing the same later that day.

"People - especially foreign investors - raised bets the BOJ

is going to hike rates this month on the back of Kono's

remarks," said Shoki Omori, chief Japan desk strategist at

Mizuho Securities.

However, Omori said that is unlikely to be the case

considering the bank has already pledged a "substantial" cut in

monthly bond buying at the same meeting, and increasing

borrowing costs at the same time would tighten financial

conditions too much.

"If we're going to get a rate hike too with this very slow

growth in Japan, it's going to be a mess."

Omori said the 10-year JGB yield could rise to 1.1% if the

BOJ makes a relatively large reduction in its bond purchases,

but a dovish Fed later in the day could send the yield back down

to 0.9%.

Meanwhile, benchmark 10-year JGB futures meandered

in a narrow range on either side of Thursday's closing level and

were last down 0.03 yen at 143.12 yen.

The 20-year JGB yield fell 1 bp to 1.830%,

while the 30-year yield sank 1.5 bps to 2.135%.

The two-year JGB yield rose 0.5 bp to 0.34%.

The five-year yield was flat at 0.585%.