TOKYO, April 9 (Reuters) - Japanese government bond

yields rebounded on Thursday amid growing uncertainty over a

two-week ceasefire between the United States and Iran.

The 10-year JGB yield rose 3.5 basis points

(bps) to 2.4%.

"Optimism over the outlook of the Middle East war faded,

with doubts about the reopening of the Strait of Hormuz," said

Naoya Hasegawa, chief bond strategist at Okasan Securities.

The 20-year JGB yield rose 5 bps to 3.315%,

and the 30-year yield climbed 5.5 bps to 3.65%.

Yields move inversely to bond prices.

Investor sentiment was hurt after Israel launched its heaviest

strikes yet on Lebanon on Wednesday, killing hundreds of people

and prompting threats of retaliation from Iran. Tehran also

signalled that it would be "unreasonable" to continue

negotiations on a permanent peace deal with the United States.

The yields fell sharply in the previous session after U.S.

President Donald Trump agreed to a two-week ceasefire with Iran.

"The declines in yields in the previous session were limited

given the heavy selloffs earlier this week, in part because the

market expects that the Bank of Japan would raise its interest

rates regardless of the fate of the Middle East war," said

Hasegawa.

The market's view on the BOJ's early rate hike is divided:

surging oil prices from the Middle East and the weak yen have

pressured inflation, but higher interest rates could hurt the

economy.

On Thursday, investors awaited the outcome of a five-year

bond auction, which will follow a disappointing 10-year bond

sale last week.

The five-year yield rose 1.5 bps to 1.800% on

Thursday, which is an attractive level for investors who want to

add the bonds to their portfolio at the start of the new fiscal

year, Hasewaga said.

The two-year yield rose 1 bp to 1.385%.