TOKYO, May 23 (Reuters) - Japan's 10-year government

bond yield on Thursday inched down from its highest level in 11

years after the Bank of Japan kept its offer for regular bond

buying unchanged.

The 10-year JGB yield was last at 0.995%, up

0.5 basis point (bp) from the close on Thursday. It hit 1%

earlier in the session, it highest level since March 2013.

Similar level was touched in the previous session as well.

"Caution about the BOJ's reduction in the amounts for its

regular buying has lifted the 10-year bond yield sharply

recently," said Kaoru Shoji, strategist at SMBC Nikko

Securities.

"We can't rule out a possibility that the BOJ may cut the

amounts on a surprising scale next month," Shoji added.

Earlier in the month, the BOJ abruptly reduced the offer

amount for bonds with 5-10 years left to maturity at its regular

bond-buying operation, leading to speculation that BOJ was

slowly allowing yields to move more freely as one way to put a

floor under a falling yen.

The market had expected the BOJ to maintain the amounts for

Thursday but they could not be certain about it given the

dollar's strength against the yen, said Shoji.

The dollar overnight rose to 156.85 yen, its

highest since May 1.

The two-year JGB yield fell 0.5 basis point to

0.34%.

The five-year yield was flat at 0.585%.

The 20-year JGB yield rose to 1.855%, its

highest level since September 2011, before retreating to 1.845%.

It was up 1.5 bps from the previous session.

The 30-year JGB yield rose 2 bps to 2.16%,

its highest since April 2011.