(Updates prices, adds analyst comment in paragraphs 3-4)

By Satoshi Sugiyama

TOKYO, April 30 (Reuters) - Japanese government bond

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

hitting a 29-year high, as a stalemate in U.S.-Iran peace talks

drove oil prices higher and fuelled inflation concerns.

The benchmark 10-year JGB yield rose 5.5

basis points (bps) to 2.515%, the highest since June 1997. The

five-year yield rose 4.5 bps to 1.9%. Yields move

inversely to bond prices.

"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 30-year yield added 5 bps to 3.69%. The yield

on the 40-year JGB, Japan's longest

tenor, rose 6 bps to 3.925%. Ahead of the finance ministry's

auction of two-year JGBs later in the day, the yield on the

notes rose 2 basis points to 1.39%.

Oil prices surged over 6% on Wednesday to settle at their

highest in weeks, with deadlocked U.S.-Iran negotiations making

investors more concerned about a prolonged disruption to Middle

Eastern energy supplies.

Although the U.S. Federal Reserve kept interest rates steady,

three policymakers dissented from the central bank's statement,

reflecting a deepening split over whether it should continue

signalling a bias toward lower borrowing costs. U.S. Treasury

yields rose to a one-month high after the release of the policy

statement.