TOKYO: Japan's 10-year government bond yield hit its highest in nearly four months, tracking US Treasury yields higher, while weak demand at a 40-year debt auction weighed on bond prices.

The 10-year JGB yield rose two basis points to 0.070%, its highest since June 9. Benchmark 10-year JGB futures fell 0.25 point to 151.37, with a trading volume of 24,885 lots.

US Treasury yields hit a three-month high overnight as investors braced for US tapering.

The Federal Reserve said last week it will likely begin reducing its monthly bond purchases as soon as November and signalled interest rate increases may follow more quickly than expected.

Earlier in the day, a 40-year debt sale received bids worth 2.53 times the amount on offer, a weaker bid-cover-ratio than the 2.72 seen at a previous auction of such bonds.

The 20-year JGB yield rose one basis point to 0.460% and the 40-year JGB yield rose 1.5 basis points to 0.775%.

The yield on the 30-year JGBs stood at 0.680%, unchanged from the previous session.

The two-year JGB yield was flat at minus 0.130% and the five-year yield rose one basis point to minus 0.085%.