TOKYO, April 8 (Reuters) - Benchmark Japanese government

bonds (JGBs) rallied on Wednesday as early signs of a pause in

hostilities in the Middle East eased worries about rising energy

costs and inflation.

The 10-year JGB yield fell 5 basis points

(bps) to 2.355%. Yields move inversely to bond prices. The

20-year yield slid 7 bps to 3.260%. The 30-year

yield sank 6 bps to 3.600%.

Yields move inversely to bond prices.

The benchmark yield had climbed to a 27-year high of 2.43%

on Tuesday, driven by surging oil prices, a weaker yen and

mounting concerns over fiscal expansion, all of which stoked

inflation fears.

U.S. President Donald Trump said on Tuesday he had agreed to

a two-week ceasefire with Iran, less than two hours before a

deadline he had set for Tehran to reopen the Strait of Hormuz.

Japan's economy is particularly vulnerable to sharp rises in

crude oil prices because of its heavy reliance on imported

energy.

Inflationary risks erode the real value of fixed bond

payments and increase pressure on the Bank of Japan to tighten

monetary policy to contain prices.