TOKYO, Aug 12 (Reuters) - Japanese government bonds

inched lower on Tuesday as investors awaited a key U.S. consumer

inflation report later in the day to assess the outlook for

interest rates.

The two-year JGB yield rose 0.5 basis point

(bp) to 0.77% and the five-year yield rose 1 bp to

to 1.045%.

Yields move inversely to bond prices.

"Investors cannot make active bets as they are not sure in

which way the price data will move," said Naoya Hasegawa, chief

bond strategist at Okasan Securities.

The market also awaited an auction for five-year bonds in

the next session, which may witness a stable outcome.

"The auction will not receive strong demand given the

current level of the five-year bond yield. But there is little

upward pressure on the yields, so there will not be any negative

surprise," Hasegawa said.

Also, the auction may be supported by demand from pension

funds, which need to rebalance their portfolios amid a sharp

recent rally in Japanese stocks.

Pension funds, such as the Government Pension Investment

Fund (GPIF), have allocation targets for each asset in their

portfolios. When stocks rise, they need to boost bond holdings

to maintain that composition.

Both Japan's Nikkei share average and the broader

Topix rose to a record high on Tuesday.

The 10-year JGBs have not been traded as of 0450 GMT.

The 20-year JGB yield rose 1 bp to 2.52%.

The 30-year JGB yield rose 2 bps to 3.090%.