JGB yields rise on weak auction outcome

TOKYO, May 8 (Reuters) - Japanese government bond yields rose on Thursday as a weak outcome of an auction for 10-year government bonds prompted investors to sell them.

The 10-year JGB yield JP10YTN=JBTC rose 3 basis points (bps) to 1.325%.

The finance ministry's auction received bids worth 2.54 times the amount sold, lower than a ratio of 3.15 times at the previous auction.

"Investors thought the 10-year bonds were expensive with the current yield level," said Keisuke Tsuruta, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

"The 10-year bond yield will hover at this level because it is hard to gauge the Bank of Japan's rate path with uncertainties of the U.S. tariff policy," said Tsuruta.

Shorter-dated bonds were also sold following the weak auction, with the two-year JGB yield JP2YTN=JBTC rising 1 bp to 0.615% and the five-year JGB yield JP5YTN=JBTC up 2 bps to 0.86%.

The 20-year JGB yield JP20YTN=JBTC rose 1 bp to 2.3%.

Yields on longer-dated bonds fell as investors bought them back after recent sell-offs.

The 30-year JGB yield JP30YTN=JBTC fell 2.5 bps to 2.87%, after hitting 2.885%, its highest since August 2004, earlier in the session.

The 40-year JGB yield JP40YTN=JBTC fell 0.5 bp to 3.33%.