TOKYO, March 6 (Reuters) - Japanese government bond

yields edged higher on Wednesday, led by shorter-dated notes, as

investors positioned for the possibility of an exit from the

Bank of Japan's negative interest rate policy this month.

Speculation of a rate hike at the BOJ's March 18-19 meeting

rose last week after board member Hajime Takata said an overhaul

of the central bank's ultra-loose monetary policy is necessary

amid heightened prospects for achieving the 2% inflation target.

Core inflation in Japan's capital re-accelerated in February

above the central bank's 2% target, data showed on Tuesday.

The two-year JGB yield was 1 basis point (bp)

higher from Tuesday at 0.18% as of 0435 GMT.

The yield hit a near 13-year high of 0.19% on Friday,

before pulling back slightly at the start of this week. In

mid-January, it was at -0.05%.

"A lot of people are now starting to think about March as a

real possibility, instead of just a risk, and that's got the

front end under pressure," said Barclays strategist Shinichiro

Kadota.

"Two's should continue to underperform on the curve as we

approach the March meeting."

Bond yields rise when prices fall.

The five-year yield rose 1.5 bps to 0.37%,

while the 10-year yield was up 1 bp at 0.71%.

The 20-year yield added 0.5 bp to 1.46%,

while the 30-year yield was flat at 1.76%.

(Reporting by Kevin Buckland; Editing by Varun H K)