Japan's 10-year bond yield hits over five-month high ahead of BOJ decision

(Updates yield levels, adds comments)

TOKYO, April 26 (Reuters) - Japan's 10-year government bond yield jumped to a more than five-month high on Friday as investors waited for the Bank of Japan (BOJ) to conclude a policy meeting at which analysts expect rate settings to be kept unchanged.

The 10-year JGB yield rose 4 basis points (bps) to 0.93%, its highest since Nov. 3, and was last at 0.925%.

The two-year JGB yield, which is highly sensitive to the BOJ's policy, rose 1.5 bps to 0.315%, its highest since July 2009.

The BOJ is expected to keep interest rates steady at the two-day meeting ending later in the day, and project inflation will stay near its 2% target in coming years on prospects of steady wage gains.

Traders are focused on signals the BOJ might send on the yen , which has hit successive 34-year lows in the past month and is now on the weaker side of 155 per dollar.

While the BOJ's mandate does not include currency management, a weak yen complicates its inflation calculation, and some investors suspect Governor Kazuo Ueda might sound hawkish or the BOJ may hint at cutting the huge amounts of bonds it regularly buys. It is currently persisting with a commitment to purchase 6 trillion yen worth JGBs a month.

"The BOJ is not going to raise rates this time, but the market has been increasingly expecting that the BOJ may cut its bond buying amounts to cope with the yen's decline," said Naoya Hasegawa, chief bond strategist at Okasan Securities.

"That would signal the BOJ will reduce its JGB holdings in the future."

The weak yen and rising oil prices have raised inflation expectations, with the break-even inflation rate, or the gap in the yields between the 10-year inflation-linked bonds and the 10-year JGBs, hitting record highs this week.

The BOJ made a historic shift out of negative interest rates in March but the yen's low yields and wide gap with U.S. rates have kept it under pressure. Ten-year yields have roughly doubled this year, but still a few basis points short of the 1% cap the BOJ used to target until March. (Reporting by Junko Fujita and Brigid Riley; Editing by Vidya Ranganathan, Christian Schmollinger and Subhranshu Sahu)