TOKYO (Reuters) - Japan's 10-year government bond yield touched a new decade-high on Wednesday on speculation that the Bank of Japan (BOJ) may raise its cap for the benchmark yield.

The 10-year JGB yield rose to 0.865% earlier in the session, its highest since July 2013. The yield retreated to 0.850%, up 1 basis point (bps) from the previous session.

A recent surge in global interest rates is heightening pressure on the BOJ to raise the existing cap on the 10-year bond yield at its policy meeting next week.

"If the BOJ raises the ceiling of the 10-year bond yield, that implies the BOJ's stance to protect its yield curve control (YCC) is different from before," said Naoya Hasegawa, senior bond strategist at Okasan Securities.

"When (Haruhiko) Kuroda was the governor, they conducted relentless bond buying to contain elevated yields. But according to what media has reported, the current administration is trying to raise the ceiling so that the BOJ can reduce the bond-buying amounts."

The BOJ has conducted several unscheduled bond-buying operations recently, including the one in the previous session. Strategists have said the BOJ has not aggressively tried to contain yields based on the amounts they offered to buy.

The central bank uses the YCC to guide the 10-year yield to around 0% to support the economy. In July, it raised the de-facto cap on the yield to 1.0% from 0.5% to allow long-term rates to rise more, reflecting increasing inflation.

The five-year yield was flat at 0.355%.

Yields on other tenors fell after a solid outcome of a liquidity-enhancing auction, with the 20-year JGB yield slipping 1.5 bps to 1.630%.

The 30-year JGB yield fell 2.5 bps to 1.830%.

The two-year JGB yield fell 0.5 bp to 0.070%.