(Updates with levels as of 0554 GMT)

By Brigid Riley

TOKYO, Sept 19 (Reuters) - Japanese government bond

(JGB) yields rose on Thursday, tracking their U.S. peers higher,

after the Federal Reserve delivered a larger-than-usual

reduction in interest rates at the conclusion of its two-day

meeting.

The 10-year JGB yield was up 3 basis points

(bps) at 0.85%, after briefly hitting 0.855% following an

overnight rise in U.S. Treasury yields.

The U.S. Treasury yield curve on Wednesday touched its

steepest level since July 2022 after the Fed cut interest rates

by 50 bps.

At a press conference, Fed Chair Jerome Powell said the

oversized cut was meant to show policymakers' commitment to

sustaining a low unemployment rate now that inflation has eased.

Superlong-term JGB yields saw the biggest rise, with the

30-year JGB yield leaping 7 bps to 2.055% after

touching its lowest since Aug. 5 at 1.985% in the previous

session.

The 20-year JGB yield rose 3.5 bps to 1.67%,

while the 40-year JGB yield jumped 8 bps to

2.335%, its highest since Sept. 3.

The Bank of Japan will wrap up its two-day monetary policy

on Friday where it is expected to stand pat, shifting attention

to any signals about additional rate hikes.

Market participants will also be tuned into indications

from the BOJ on the progress the economy is making, said Yurie

Suzuki, a market analyst at Mizuho Securities.

The economic fundamentals "are currently looking quite

robust, and even regarding inflation, there are strong areas

when you look closely," Suzuki said.

Markets are weighing the chance of another small rate

increase in December or January, with only a small probability

priced in for next month.

Elsewhere on the curve, the five-year yield

ticked 2 bps higher to 0.495%.

The two-year JGB yield had yet to trade.

Benchmark 10-year JGB futures fell 0.23 points to

144.66 yen.