(Updates after auction results)

By Kevin Buckland

TOKYO, Jan 16 (Reuters) - Japanese government bond

yields dropped on Thursday amid pressure from a steep slide in

U.S. Treasury yields overnight and strong demand at an auction

of domestic 20-year bonds.

The 10-year JGB yield sank 4.5 basis

points (bps) to 1.205% as of 0555 GMT, retreating from

Wednesday's peak of 1.255%, a level previously not seen since

April 2011.

The 20-year JGB yield tumbled 5.5 bps to

1.96%, with measures of demand at a sale of 758.2 billion yen of

the securities improving from the previous auction last month.

The 30-year JGB yield fell 3 bps to 2.325%.

Benchmark 10-year JGB futures rose 0.45 yen to

141.04. Bond yields move inversely to prices.

The 10-year U.S. Treasury yield stood at

4.6593% on Thursday, after plunging as much as 15 bps to a

one-week low of 4.6370% in the prior session.

U.S. data overnight showed a cooling in core inflation,

which reignited bets for a Federal Reserve interest rate cut by

July.

At the same time, declines in shorter-dated JGB yields were

shallower amid rising bets for the Bank of Japan to raise rates

at its meeting next week.

Comments from BOJ Governor Kazuo Ueda and one of his

deputies, Ryozo Himino, this week have opened the door to a rate

hike on Jan. 24, barring any resurgence in market volatility

after Donald Trump's inauguration as U.S. President.

"Although there is still elevated uncertainty around the

Trump administration's management of policy and the market's

reaction thereto, it appears that at least the BOJ's stance on

rate hikes has completely changed since December," Barclays

analysts wrote in a report, as they brought forward their call

for the next BOJ hike to this month from March.

The two-year JGB yield eased 1 bp to 0.69%,

while the five-year yield fell 2.5 bps to 0.865%.