TOKYO, Nov 18 (Reuters) - Japanese government bonds

(JGBs) remained under pressure on Tuesday, with 20-year yields

reaching a 26-year high, as concerns swirled about a massive new

stimulus.

The 20-year JGB yield rose 7 basis points

(bps) to 2.81%, the highest since July 1999. The benchmark

10-year yield rose 2 bps to 1.750%, a level not

seen since June 2008. Yields rise when bond prices fall.

Japan's yield curve has steepened sharply as investors

priced in a bigger-than-anticipated spending package from Prime

Minister Sanae Takaichi, along with further delays in rate hikes

from the central bank.

Takaichi, who has urged the Bank of Japan to work with the

government to reflate the economy, is due to hold her first

bilateral meeting with BOJ Governor Kazuo Ueda on Tuesday

afternoon.

Markets are also on guard ahead of an auction of about 800

billion yen ($5.16 billion) in 20-year JGBs on Wednesday.

"The market had been optimistic about Takaichi's spending

plans, but it turned out that the size of the economic stimulus

package is seen to be increasing," said Naoya Hasegawa, chief

bond strategist at Okasan Securities.

"It's bad timing for the 20-year auction," Hasegawa said.

"If demand is weak, then yields could rise further."

Japan must compile a stimulus of around 23 trillion yen,

Goushi Kataoka, a private-sector member of a key government

panel, told Reuters on Monday. That would far exceed the 17

trillion yen package size previously reported by the Nikkei

newspaper.

The combination of spending and tax cuts can be funded with

10 trillion yen in new bond issuance and 13 trillion yen worth

of tax and non-tax revenues, Kataoka said.

The 30-year yield rose 7 bps to 3.325%,

nearing its all-time high of 3.345% reached last month.

The two-year JGB yield fell 0.5 bp to 0.925%,

and the five-year yield rose 0.5 bp to 1.260%.

($1 = 155.1700 yen)

(Reporting by Junko Fujita and Rocky Swift in Tokyo; Editing by

Subhranshu Sahu)