TOKYO, Aug 5 (Reuters) - Japanese government bond (JGB)

yields fell on Wednesday, tracking U.S. Treasury yields lower

overnight, as the decline in oil prices eased fears of rising

inflation, and the yields retreated from the previous session's

sharp rise driven by a weak auction outcome.

Here are a few details:

* The benchmark 10-year JGB yield fell

3.5 basis points (bps) to 2.81%. The five-year yield

fell 3 bps to 2.05%. Yields move inversely to bond

prices.

* Interest rate-sensitive two-year U.S. Treasury yields fell

to a two-week low on Tuesday as oil prices tumbled on hopes for

a deal to end the Iran war, prompting traders to reprice for

lower odds of a Federal Reserve interest rate hike in

September.

* "Investors bought back bonds after the yields rose sharply

in the previous session after a weak 10-year bond auction," said

Eiichiro Miura, senior general manager of investments at Nissay

Asset Management.

* The two-year yield, inched down 0.5 bp to

1.56% after rising to 1.57% in early trade, matching the highest

level in May 1995 marked in the previous session.

* The two-year bond yield, which reflects the Bank of

Japan's policy, is under upward pressure because the market

expects an interest rate hike at a faster pace after last week's

joint intervention by Washington and Tokyo to buy the Japanese

yen, Miura said.

* "The intervention to shore up the yen raised bets for

faster-paced interest rate hikes. The market expects the next

hike as early as September, and there could be another one in

December," Miura said.

* Swap rates indicate an 86.6% chance for the BOJ to raise

its policy rate by 25 basis points to 1% in October.

* The 20-year JGB yield fell 2 bps to 3.685%.

The 30-year yield slipped 2 bps to 3.97%. The

yield on the 40-year JGB fell 1.5 bps to 4.01%.