TOKYO, March 13 (Reuters) - Yields on Japan's

shorter-dated government bonds reversed course to rise on

Thursday as comments from the Bank of Japan chief boosted bets

for an early interest rate hike.

The 10-year JGB yield rose 1 basis point to

1.35%, after falling to as low as 1.495% earlier in the session.

BOJ Governor Kazuo Ueda said on Thursday he expects

consumption to improve, as the rise in import costs moderates

and wage growth strengthens.

"Some investors thought Ueda's comments indicated signs for

the early rate hike and they sold JGBs, " said Katsutoshi

Inadome, senior strategist at Sumitomo Mitsui Trust Asset

Management.

The BOJ is set to keep rates steady at next week's policy

meeting, though the board may discuss a hike as soon as May with

an eye on domestic inflation and market volatility induced by

uncertainty on U.S. trade policy, sources have told Reuters.

Wages are seen as key for the BOJ's policy path. Many of

Japan's biggest companies have met union demands for substantial

wage hikes for a third consecutive year, seeking to help workers

cope with inflation and retain staff amid labour shortages.

The two-year JGB yield reversed course to rise

1 bp to 0.855%. The five-year yield rose 2 bps to

1.15%, after falling to 1.115%.

Inadome said the BOJ will most likely raise its policy rate

at its July meeting. Swap rates indicate a 79% chance of the BOJ

raising the rate by 25 basis points to 0.75% at its meeting in

July.

Yields on super-long dated bonds fell, with the 20-year JGB

yield slipping 1 bp to 2.245% and the 30-year

JGB yield fell 2 bps to 2.565%.

The 40-year JGB yield was flat at 2.895%.

(Reporting by Junko Fujita; Editing by Mrigank Dhaniwala)