TOKYO, Dec 18 (Reuters) - Japanese government bond

yields fell on Wednesday, reversing rises in the previous

session, as investors bet the Bank of Japan (BOJ) will keep the

interest rates steady at its latest meeting.

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

to 1.065%.

The BOJ will conclude its final policy meeting for the year

on Thursday, with its decision due to be announced just hours

after the Federal Reserve's expected interest rate cut.

"The yields rose too much in the previous session. Because

the market expected the BOJ to keep the interest rates steady,

they bought back bonds," said Miki Den, senior Japan rate

strategist at SMBC Nikko Securities.

JGB yields rose on Tuesday as a weaker yen drove bets for

the rate increase this month.

There is speculation that the BOJ may keep the rates steady

at its January meeting and such bets supported the yields, said

Naoya Hasegawa, chief bond strategist at Okasan Securities.

"Some market players wonder how the BOJ can justify raising

rates in January if it holds the rates steady this month,"

Hasegawa said.

But the slow pace of the policy shift will weaken the yen,

which may prompt the BOJ to raise rates, he said.

Swap rates indicated a 17.6% probability of the BOJ raising

rates by a quarter-point on Thursday and 61.3% chance in

January, compared to a 70% chance for the January hike earlier

this month.

The two-year JGB yield fell 0.5 bp to 0.585%

and the five-year yield fell 1 bp to 0.72%.

The 20-year yield fell 1.5 bps to 1.87% and

the 30-year yield fell 3 bps to 2.265%.

The 40-year yield fell 3.5 bps to 2.63%.

(Reporting by Junko Fujita; Editing by Varun H K)