TOKYO, Dec 3 (Reuters) - Japanese government bond (JGB)

yields hovered in a tight range on Tuesday, as an auction for

10-year bonds made few waves amid heightened expectations that

the Bank of Japan will raise interest rates this month.

The 10-year JGB yield rose to as high as

1.085% but was last flat at 1.075% after the auction, while

10-year JGB futures rose 0.05 points to 142.87 yen.

The auction results were "adequate," with limited reaction

in yields suggesting it was in line with expectations, said

Makoto Suzuki, senior bond strategist at Okasan Securities.

The bid-to-cover ratio, a common measure of demand, came in

at 3.12, down a hair from 3.13 in November.

At the same time, investors were eyeing a December rate hike

at the BOJ's 18-19 meeting.

The two-year JGB yield, which more closely

corresponds to monetary policy expectations, had hit a 16-year

high of 0.625% on Monday following an interview with BOJ

Governor Kazuo Ueda published in the Nikkei newspaper over the

weekend.

In the interview, Ueda said the timing of the next interest rate

hike was "approaching," reinforcing growing bets that the BOJ

will raise rates from the current 0.25% as soon as its next

meeting.

The yield was last down 1 basis point at 0.61%, but remained

near recent peaks.

"The fact that (the two-year yield) has risen to 0.6% means

that, in a way, a hike of 0.25% has already been factored in by

the market to some extent," said Suzuki.

Barring any surprise events or big moves in U.S. Treasury

yields, JGB yields will likely hold relatively steady as

investors wait to confirm the BOJ's decision, he said.

The five-year yield fell 0.5 bp to 0.74%.

The 20-year JGB yield was unchanged at 1.87%,

while the 30-year JGB yield edged up 0.5 bp to

2.29%.

The 40-year JGB yield was up 0.5 bp at 2.64%.

(Reporting by Brigid Riley; Editing by Varun H K)