TOKYO, Aug 14 (Reuters) - Japanese government bonds fell on

Friday, sending shorter-term yields to historic highs, as

expectations firmed around a Bank of Japan interest rate hike

next month.

Here are a few details:

* The two-year yield, the one most sensitive

to BOJ policy rates, added 0.5 basis point (bp) to 1.650%, the

highest since May 1995. Yields move inversely to bond prices.

* The five-year yield advanced 1.5 bps to a

record high of 2.135%, extending its streak of gains to five

sessions. The benchmark 10-year JGB yield climbed

0.5 bp to 2.875%.

* Three sources familiar with the BOJ's thinking said the

central bank is set to raise interest rates as soon as September

and is considering accelerating the pace of hikes thereafter.

* "Speculation about an early interest rate hike by the Bank

of Japan continues to weigh on the market," Takayuki Miyajima,

senior economist at Sony Financial Group, said in a note.

* Japan may signal the chance of faster-than-expected

interest rate increases to stem the yen's decline, Tokyo's

former top currency diplomat Mitsuhiro Furusawa told Reuters.

* Data on Thursday showed Japan's July producer price index

rose 7.2% year-on-year, slightly below forecasts but still

elevated enough to reinforce expectations for a rate hike.

* JGBs rose earlier in the session, tracking gains in U.S.

Treasuries after tame producer price data cooled expectations

for a Federal Reserve rate hike next month.

(Reporting by Rocky Swift in Tokyo; Editing by Harikrishnan

Nair and Subhranshu Sahu)