TOKYO, May 27 (Reuters) - Benchmark Japanese government bond yields hit a fresh 12-year peak on Monday, extending their rally amid bets for further policy tightening by the Bank of Japan (BOJ).

The 10-year JGB yield rose 1.5 basis points (bps) to 1.020% by 0454 GMT, the highest level since April 2012.

The break above 1% last week "probably holds no special meaning, and is merely the result of rates working their way higher due to expectations of further BOJ rate hikes and reductions in its bond purchases," Mizuho Securities strategists Noriatsu Tanji and Yurie Suzuki wrote in a client note.

"Future developments in yen rates will depend largely on BOJ policy decisions," they wrote. The central bank next meets on policy on June 13-14.

The 10-year JGB yield has advanced nearly 30 bps since the end of March, the month the BOJ raised interest rates for the first time since 2007.

Wagers have been building for additional hikes this year as a tumbling local currency threatens to upend the central bank's idea of mild inflation driving a cycle of higher wages.

Expectations for near-term quantitative tightening have also grown after the BOJ unexpectedly trimmed bond purchases at a regular operation at the start of this month.

Japan's benchmark yield ticked up on Monday despite BOJ Governor Kazuo Ueda saying at a two-day conference that policy makers "will proceed cautiously, as do other central banks with inflation-targeting frameworks."

Benchmark 10-year JGB futures fell 0.09 yen to 143.5.

The two-year JGB yield rose 1 bp to 0.345%. The five-year yield added 1 bp to 0.595%.

The 20-year yield edged up 0.5 bp to 1.865%, while the 30-year yield advanced 1 bp to 2.175%. (Reporting by Kevin Buckland; Editing by Subhranshu Sahu)