TOKYO, June 27 (Reuters) - Japanese government bond (JGB) yields rose on Thursday as the yen at a 38-year trough fuelled expectations of a possible interest rate hike by the Bank of Japan (BOJ) next month.

The benchmark 10-year JGB yield jumped 5.5 basis points (bps) to a one-month high of 1.075%.

The two-year JGB yield, which corresponds more closely with monetary policy expectations, climbed 4.5 bps to 0.35%, its highest since June 12.

The yen sank to 160.88 per U.S. dollar on Wednesday, its weakest level since 1986, spurring bets that the BOJ will have to raise interest rates for a second time this year at its July meeting to slow the yen's fall.

But concerns remain about the state of the nation's economy, and some question whether the BOJ will hike rates at the same meeting it will announce specific plans for tapering its bond purchases.

"If I were asked to state whether or not I think there will be a rate hike (in July), my answer would continue to be no," said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.

"However, it's becoming quite difficult to ignore that there is a possibility."

Markets are now pricing in a 69% chance of a hike next month, according to LSEG data.

Economists were split over the timing of the BOJ's next interest rate hike, according to a Reuters poll published last week.

Meanwhile, U.S. Treasury yields moved higher, in part due to fears that Tokyo could sell Treasuries to intervene in the foreign exchange market, adding additional upward pressure on JGB yields.

The five-year yield was 4.5 bps higher at a two-week peak of 0.595%.

The 20-year JGB yield rose 5 bps to 1.92%. The yield hit 1.93% earlier in the session, its highest since July 2011.

The 30-year JGB yield was up 5.5 bps at 2.290%, its highest since March 2011.

(Reporting by Brigid Riley; Editing by Eileen Soreng)