By Rocky Swift

TOKYO, May 21 (Reuters) - Japanese government bonds (JGBs) rose for a second straight day on Thursday, tracking gains in global debt markets and as investors seized on a run-up in yields to historic levels.

The yield on the 10-year JGB JP10YTN=JBTC eased 3.5 basis points (bps) to 2.750%, retreating further from a 29-year high scaled earlier in the week. The yield on the 30-year JGB JP30YTN=JBTC dropped 8.5 bps to 4.015%. Yields move inversely to bond prices.

Yields across the JGB curve jumped to record and multi-decade highs earlier this week as inflation concerns mounted, bets for a rate hike by the central bank solidified, and expectations grew that the government will use debt to pay for a supplementary budget.

U.S. Treasury yields fell sharply overnight after President Donald Trump said peace deal talks with Iran were in their final stage. A solid 20-year JGB auction in the prior session also helped allay concerns that inflation would erode appetite for longer-dated bonds.

"The significant rise in super-long-term government bond yields created a perception of undervaluation, attracting solid demand," Sony Financial Group senior economist Takayuki Miyajima said in a note.

"Given that expectations of an early rate hike are already largely priced in, the market is likely to remain nervous as it continues to monitor crude oil prices and developments in fiscal and monetary policy."

Highlights for JGB investors on Thursday include scheduled speeches by a Bank of Japan board member as well as a meeting between the government and bond market participants, he added.

The two-year yield JP2YTN=JBTC, the one most sensitive to Bank of Japan policy rates, eased 0.5 bp to 1.445%. The five-year yield JP5YTN=JBTC fell 1 bp to 2.025%.