TOKYO, June 2 (Reuters) - Japanese government bond

prices fell on Monday, as the market was cautious about the

outcome of an auction for 10-year bonds in the next session.

The 10-year JGB yield rose 1 basis point (bp)

to 1.51%. The two-year JGB yield rose 0.5 bp 0.75%

and the five-year yield rose 1.5 bps to 1.03%.

Bond yields move inversely to prices.

"The 10-year bond auction will be relatively firm or could

be weak as there are uncertainties surrounding the bond market,"

said Takahiro Otsuka, senior fixed income strategist at

Mitsubishi UFJ Morgan Stanley Securities.

The auction comes as the market is worried that the issuance

of shorter-dated bonds may increase in the coming months, as the

government will consider trimming the issuance of super-long

bonds in the wake of recent sharp rises in yields for the notes.

However, the 10-year yield is hovering near 1.5%, higher

than the levels at previous auctions, and that is a positive

factor, said Otsuka.

"The market is also cautious about the upcoming upper-house

election in Japan next month," said Otsuka.

Because if the ruling party loses the majority, Prime

Minister Shigeru Ishiba may resign, and that could lead to a new

administration pushing fiscal expansion, he added.

The yield on the 30- and 40-year JGBs hit record highs amid

fiscal deficit concerns last month.

On Monday, the 20-year JGB yield was flat

at 2.41% and the 30-year JGB yield fell 1 bp to

2.955%.

The 40-year JGB bonds were not traded, as of 0507 GMT.