TOKYO, Jan 16 (Reuters) -
Japanese government bond (JGB) yields rose from multi-month lows on Tuesday after poor demand at an auction of five-year notes, and a selloff in overseas bond markets.
The five-year yield added 2 basis points (bps) to 0.175% as of 0500 GMT. It had dipped to 0.155% on Monday, the lowest level since July 28.
The 10-year JGB yield climbed 3 bps to 0.585%, after dropping as low as 0.55% in the previous session.
Bond yields rise when prices fall.
JGB yields rose in early trading, pulled by a jump in European bond yields overnight after central bank officials, including Bundesbank president Joachim Nagel, said it was too soon to talk about cutting interest rates.
U.S. markets were closed for a holiday, but Treasury yields rose in Asia hours on Tuesday, with the 10-year yield pushing back above 4%.
JGB selling accelerated after the finance ministry announced the results of the five-year note auction, which analysts termed as "weak."
It was the third tepid sale in a row, following lacklustre demand at 10-year and 30-year JGB auctions last week.
"The market is now thinking, why wouldn't the 20-year auction come out weak too," said Shoki Omori, chief Japan desk strategist at Mizuho Securities.
The finance ministry sells 20-year bonds on Thursday.
As long as U.S. yields remain elevated, it would be hard for JGB yields to fall, he added.
Benchmark 10-year JGB futures declined 0.3 yen to 147.36.
The 20-year yield rose 2 bps to 1.29%, while the 30-year yield added 1.5 bps to 1.59%.
The two-year note had yet to trade. (Reporting by Kevin Buckland; Editing by Varun H K)
