(Adds results of 2-year JGB auction, analyst quote, updates oil

prices)

By Satoshi Sugiyama

TOKYO, April 30 (Reuters) - Japanese government bond

yields rose on Thursday, with the benchmark 10-year yield

hitting a 29-year high, as reports of U.S. military action to

end Iran stalemate drove oil to a four-year high and fuelled

inflation concerns.

The benchmark 10-year JGB yield rose 6.5

basis points to 2.525%, the highest since June 1997. The

five-year yield rose 5 bps to a record high of

1.905%.

Yields move inversely to bond prices.

Brent crude futures jumped $8 to $126.09 a barrel by

0417 GMT, after a 6.1% rise on Wednesday.

"Higher oil prices and the risk of further deterioration in

the situation around the Strait of Hormuz are weighing on the

market, leading to stronger selling pressure in the long end of

the bond market," said Ryutaro Kimura, fixed-income strategist

at BNP Paribas Asset Management.

"It raises the risk of further price increases, and, judging

from global market scenarios as well, the current move is likely

to heighten inflation concerns."

The Bank of Japan's reluctance to signal a near-term rate

hike, after keeping interest rates steady on Tuesday, also

reinforced pressure on yields at the long end, Kimura said.

Meanwhile, the two-year JGB yield, which is

most sensitive to BOJ policy, pared early gains to 1.375%, up

0.5 bp on the day.

Demand was strong at an auction of about 2.8 trillion yen

($17.45 billion) of the notes, with a bid-to-cover ratio of

5.24, the highest since August 2024.

Kimura said the auction results signalled less about yield

appeal than investor caution, with funds rotating into shorter

maturities as a defensive play amid growing concern over

rising-rate risk in long- and super-long bonds.

The 30-year yield added 6 bps to 3.7%. The

yield on the 40-year JGB, Japan's longest tenor,

rose 7 bps to 3.935%.

Separately, Reuters reported that Japan's government is

considering reinstating electricity and natural gas subsidies

for three months starting in July, with funding of up to about

500 billion yen, to be drawn from reserve funds rather than a

supplementary budget.

($1 = 160.4700 yen)