(Rewrites throughout, adds comments in paragraph 6, updates

yields)

By Junko Fujita

TOKYO, July 31 (Reuters) - Japanese government bond (JGB)

yields rose on Friday as market participants expect the Bank of

Japan to send a hawkish message to support the yen after

government intervention to prop up the currency.

The two-year JGB yield, the one most sensitive

to the central bank's policy, rose 2 basis points to 1.515% in

early trade. Yields move inversely to bond prices.

The five-year yield rose 1.5 bps to 2.03%. The

10-year JGB yield edged up 1 bp to 2.805%.

The BOJ is widely expected to keep monetary policy steady at

the end of its two-day policy meeting later in the day and

signal its resolve to continue raising borrowing costs.

On Thursday, the government intervened to prop up the yen,

keeping pressure on the central bank to demonstrate its

hawkishness.

"The market expects the BOJ will send hawkish message today

to keep the yen's strength. The central bank would not want to

ruin the effect of the intervention," said Takashi Fujiwara,

chief fund manager at Resona Asset Management's fixed income

investment division.

The yen weakened in early trade. The dollar gained 0.76% to

160.67 against the yen, after diving 2.4% in its biggest

single-day drop since January 2023 in the previous session.

JGBs were also under pressure as investors were concerned

about the source of funding for a planned tax cut on food items,

Fujiwara said.

Japanese Prime Minister Sanae Takaichi announced on Thursday

her intention to proceed with a two-year cut on a sales tax of

8% on food items, a move set to strain the country's worsening

finances.

Bonds with other tenors had not been traded as of 0036 GMT.

(Reporting by Junko Fujita; Editing by Subhranshu Sahu)