TOKYO, May 14 (Reuters) - Japanese government bond (JGB)

yields rose on Tuesday to their highest in more than a decade,

as bets grew that the Bank of Japan (BOJ) could raise interest

rates in coming months.

In a hawkish signal on Monday, the Japanese central bank

unexpectedly cut the amount of bonds it offered to buy in a

regular purchase operation.

BOJ Governor Kazuo Ueda "has been very clear: he wants the

market to find the right balance of long-term yields, instead of

relying on the BOJ," said Ales Koutny, head of international

rates at Vanguard.

The reduction in JGB purchase amount has seen increased bets

for another rate hike, pushing the 10-year JGB yield

to a six-month high of 0.965%.

The two-year JGB yield, which corresponds

closely to policy expectations, was up 1 basis point (bp) at

0.340%, after touching its highest since June 2009 at 0.345%.

Some market participants believe the yen's excessive

weakness may be forcing the BOJ's hand, with many suspecting

that to be the reason behind the cut to JGB offer amounts, said

Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust

Asset Management.

"An increasing number of people in the market are thinking

if the aim really is to stop the yen's depreciation, then

wouldn't the BOJ raise rates as soon as July even?" he said,

adding that the central bank was also expected to begin

quantitative tightening at its June meeting.

Questions, however, remain about the state of the Japanese

economy. First-quarter gross domestic product numbers due on

Thursday are expected to show a decline.

Japanese Finance Minister Shunichi Suzuki said on Tuesday

the government will work with the BOJ on currency market matters

to ensure there is no friction between their mutual policy

objectives.

An auction for the five-year bond saw decent demand despite

concerns that higher expectations of an imminent rate hike would

put off investors. The five-year yield climbed to

a 13-year peak of 0.565% before easing to 0.560%.

The 20-year JGB yield was up 3 bps at an

11-year peak of 1.770%.

The 30-year JGB yield rose 2.5 bps to 2.050%,

its highest since July 2011.

(Reporting by Brigid Riley; Editing by Subhranshu Sahu)