TOKYO, Sept 17 (Reuters) - Japanese government bond

(JGB) yields fell on Tuesday, tracking their U.S. peers lower as

bets grew that the Federal Reserve would deliver a

half-percentage-point rate cut this week.

Markets are now pricing in a 69% chance of a 50 basis-point

rate cut at the end of the Fed's Sept. 17-18 meeting, up from

30% a week ago, CME Group data shows.

The U.S. Treasury two-year yield fell on Monday to its

lowest in two years, while the 10-year's yield eased for a

second straight session.

The 10-year JGB yield was down 1.5 bps at

0.825% as of 0450 GMT after earlier slipping to a fresh

one-month low of 0.82%, while 10-year JGB futures rose

0.16 points to 144.87 yen.

Japanese markets were closed on Monday for a public holiday.

With the U.S. Treasury market still fluctuating between bets

for a 50 bp and 25 bp cut this week, there's a good chance that

a super-sized reduction will add downward pressure on JGB

yields, said Ryutaro Kimura, a fixed income strategist at AXA

Investment Managers.

However, given the "risk of a hawkish message from the Bank

of Japan" at its meeting this week and the possibility of more

rate hikes in the near future, the drop in JGB yields is "likely

to be limited," he said.

Yields are expected to rise with interest rates, making

current levels less attractive.

The BOJ will begin its two-day monetary policy meeting on

Thursday, where it is expected to keep rates steady while

signalling additional increases are coming.

Among the economists polled by Reuters, 54% forecast another

hike by the year-end.

The 20-year JGB yield briefly touched its

lowest since Aug. 5 at 1.615%. It was last down 1.5 bps at

1.62%.

The 30-year JGB yield fell 1.5 bps to 1.995%.

The two-year JGB yield and five-year yield

slid 1 bp each to 0.375% and 0.485%, respectively.

(Reporting by Brigid Riley; Editing by Subhranshu Sahu)