TOKYO, July 9 (Reuters) - The benchmark 10-year Japanese

government bond yield hit a 30-year high on Thursday, driven by

concerns over inflation from renewed tensions in the Middle East

and Japan's fiscal health, while a five-year JGB auction was

relatively firm as expected.

The 10-year JGB yield rose 3.5 basis points to

2.900%, the highest since September 1996. It also marked its

ninth straight day of gains, the longest streak in 19 years.

Yields move inversely to bond prices.

Analysts saw the outcome of five-year note auction as

moderately firm. The auction's bid-to-cover ratio, a measure of

demand, was 3.43 times, compared with 3.11 times at the previous

sale.

"When yields are up across the curve, investors want to buy

shorter-dated bonds to avoid risks," said Miki Den, the senior

Japan rate strategist at SMBC Nikko Securities.

"But the level of the yield on the five-year bonds is not

high enough given ongoing inflation. That capped demand for the

auction," he added.

The five-year yield rose 0.5 bps to 1.990%,

easing slightly after the auction. The two-year yield

, the one most sensitive to the Bank of Japan's

policy rates, increased 1.5 bps to 1.445%.

Oil prices jumped more than 1% after U.S. President Donald

Trump said he thought a tentative deal to end the war with Iran

was over, pushing U.S. Treasury yields to a multi-week high.

Longer-dated JGBs, more sensitive to inflation and

fiscal-risk premiums, came under pressure. The 20-year JGB yield

climbed 2 bps to 3.890%. The 30-year yield

added 3 bps to 4.030%. The yield on the 40-year

JGB, Japan's longest tenor, rose 5 bps to 4.055%.

JGB yields have risen since the government outlined large

spending plans in the policy blueprint last month. The blueprint

called on the BOJ to align monetary policy with growth efforts,

fuelling ​concerns the government could pressure the central

bank to keep interest rates low and risk falling behind the

curve as inflationary pressures build.

Tokyo is considering revising language on monetary policy in

the economic ‌blueprint, a draft obtained by Reuters showed.

The gap between 10-year and 2-year JGB yields widened on

Wednesday to 143 bps, the highest since 2004, reflecting growing

concerns about inflation and price risk on the long end along

with shrinking expectations for BOJ rate hikes on the short end.

($1 = 162.5500 yen)