TOKYO, July 15 (Reuters) - Japan's 10-year government

bond yield rose to a near 17-year high in early trade on Tuesday

amid worries about the nation's fiscal health ahead of a closely

monitored national election at the end of this week.

The 10-year JGB yield rose to as high as

1.595%, its highest level since October 2008.

The market weighed the risk of the defeat of the Liberal

Democratic Party and its coalition partner Komeito at the

upcoming upper house election on July 20.

A potential defeat could empower opposition parties that

have pledged in their campaign platforms to cut or abolish the

sales tax.

If the LDP-led coalition loses the majority, the 10-year

bond yield could rise to as high as 1.8%, the highest level

since mid-2008, said Katsutoshi Inadome, a senior strategist at

Sumitomo Mitsui Trust Asset Management.

"This means how the fiscal health has worsened and prices

have risen since then," Inadome said.

"Now the Bank of Japan owns about half of the JGBs and that

has capped the yields from rising further. Back then, the BOJ's

ownership was much smaller."

Japan's ruling coalition will likely lose its majority in

the upper house election, the Asahi newspaper said on Tuesday.

Prime Minister Shigeru Ishiba's administration has seen

approval ratings slide as the rising cost of living, including

the soaring price of Japan's staple rice, hit households.