(Update yield levels, adds comments)

TOKYO, June 14 (Reuters) - Japan's 10-year government

bond yield fell on Friday to a one-month low ahead of the Bank

of Japan's policy decision, as investors bet the pace of the BOJ

tapering will be gradual.

The 10-year JGB yield fell 2 basis points

(bps) to 0.945%, its lowest level since May 17. The 20-year JGB

yield fell 2.5 bps to 1.745%.

The BOJ is expected to keep interest rates steady at its

two-day policy meeting ending later in the day. The market focus

is on how and when the central bank plans to reduce its huge

balance sheet, which has ballooned as a result of its aggressive

bond buying.

A Reuters poll showed nearly two-thirds of economists expect

the BOJ to spell out it will start tapering its monthly bond

buying, now set around 6 trillion yen.

"Investors were selling JGBs in the run-up to the BOJ's

policy meeting as they braced for cuts in the bond buying

amounts," said Keisuke Tsuruta, senior fixed income strategist

at Mitsubishi UFJ Morgan Stanley Securities.

"But the speculation eased as U.S. yields started falling

and now they bet any changes in the offer amounts will be

gradual and will not drive the yields higher."

JGB yields rose sharply last month, with the 10-year bond

yield hitting a near 13-year high of 1.1%, due to hawkish

signals from the central bank, including an abrupt cut in its

regular bond buying amount in mid-May.

The two-year JGB yield fell 1 bp to 0.315%.

The five-year yield fell 1 bp to 0.535%.

The 30-year JGB yield fell 2.5 bps to

2.090%.

The 40-year JGB yield fell 2 bps to 2.230%.

(Reporting by Junko Fujita; Editing by Subhranshu Sahu)