TOKYO, March 12 (Reuters) - Japanese government bond

(JGB) yields rose on Thursday, as a renewed climb in oil prices

stoked bets that the government may expand spending to cope with

inflation.

Oil prices jumped on Thursday as Iran stepped up attacks on

oil and transport facilities across the Middle East, raising

fears of a prolonged conflict and oil-flow disruptions through

the Strait of Hormuz.

The benchmark 10-year JGB yield rose 3 basis

points (bps) to 2.185%.

The 20-year JGB yield climbed 3.5 bps to

3.065% and the 30-year bond yield rose 4 bps to

3.47%.

"With the oil prices rising, the market has started pricing

in the possibility that the government may take measures that

involve more spending to cope with inflation," said Yuuki

Fukumoto, senior researcher at NRI Research.

Prime Minister Sanae Takaichi's aggressive fiscal policy

stance has already shaken the JGB market, sending yields of

super-long-dated bonds to record highs in January when she

announced the dissolution of parliament and called a snap

election.

Japan, which depends on the Middle East for around 95% of

its oil supplies, said on Wednesday it would release about 80

million barrels of oil from its strategic reserves, equivalent

to 45 days of supply, to mitigate global disruptions.

"With so much uncertainty in the Strait of Hormuz, it is

hard for investors to buy bonds with longer durations," Fukumoto

said.

The selloff in shorter-dated bonds was limited, steepening

the yield curve.

The two-year yield rose 1 bp to 1.255% and the

five-year yield rose 2 bps to 1.630%.