TOKYO, Feb 17 (Reuters) - Shorter-duration Japanese

government bond (JGB) yields rose on Monday, with the 10-year

yield hitting a 15-year high after data revealed that the

economy expanded more than expected in the fourth quarter,

boosting bets for an interest rate hike.

The 10-year JGB yield rose 2.5 basis points

(bps) to 1.375% for the first time since April 2010, while

10-year JGB futures fell 0.35 points to 139.3 yen.

The five-year yield climbed 4.5 bps to a

17-year high of 1.05%.

Japan's gross domestic product expanded at an annualised

clip of 2.8% in the October-December quarter, data showed on

Monday, beating market estimates of a 1.0% gain, on improved

business spending and a surprise increase in consumption.

The data supports bets that the Bank of Japan (BOJ) will

continue to raise interest rates as it sets about normalising

super-easy monetary policy.

Markets have factored in 37 bps of rate hikes for the rest

of the year, with another 25-bp increase fully priced in by

September.

While market players still appear to anticipate the BOJ's

tightening cycle will top out around 1%, analysts at Morgan

Stanley MUFG Securities see a further upward repricing of

short-term policy rate expectations for now as policymakers

signal a potentially higher neutral rate.

Worries about weakness in the yen as U.S.-Japan rate

differentials look set to persist and a move higher in mid- to

long-term inflation expectations have also added to the mix.

"We thus see ample scope for an upward repricing of the

BOJ's near-term policy rate trajectory until U.S. growth

prospects start to become a greater concern," Koichi Sugisaki,

Japan macro strategist at Morgan Stanley MUFG, said in a

research note.

On Monday, the two-year JGB yield, which

closely tracks monetary policy expectations, ticked up 1.5 bps

to 0.805%.

The 20-year JGB yield was flat at 2.005%,

while the 30-year JGB yield fell 0.5 bp to

2.305%.