TOKYO, March 18 (Reuters) - Japan's benchmark 10-year

government bond yield rose on Tuesday, reversing course as

investors awaited the Bank of Japan's policy decision.

The yield was up 0.5 basis point (bp) at

1.51%, after slipping 1 bp to 1.495% earlier in the session.

The BOJ is set to keep interest rates steady on Wednesday and

discuss just how much of a risk the escalating U.S. trade war

poses to Japan's export-reliant economy, which will be key to

the timing of its next rate hike.

"The market is moving without a direction as investors are

awaiting cues from tomorrow's decision and comments of the

central bank," said Katsutoshi Inadome, a senior strategist at

Sumitomo Mitsui Trust Asset Management.

"Investors will seek hints for the BOJ's rate hike policy

from its view on the U.S. economic outlook," Inadome said.

The two-year JGB yield also reversed course

from an 0.5 bp decline, rising 1 bp to 0.815%. The five-year

yield rose 0.5 bp to 1.1%, after declining

marginally to 1.09%.

The yields hit levels last seen more than a decade ago

earlier this month as bets escalated that the BOJ would raise

its policy rate faster and higher on the back of growing wages

and rising prices.

Such speculation helped levels of open interest in TONA futures

contracts pegged to the BOJ's overnight call rate

to hit a record high this month, according to

according to Japan Exchange Group.

The three-month TONA futures launched in May in 2023 and

grew rapidly as the BOJ ended the negative rate policy in March

2024 and started raising its policy rate.

The TONA futures maturing in September indicate the BOJ's

overnight call rate to be at 0.6275% and the one maturing in

December at 0.725%.

The 20-year JGB yield fell 1 bp to 2.27% and

the 30-year JGB yield fell 0.5 bp to 2.6%.

(Reporting by Junko Fujita; Editing by Varun H K)