By Brigid Riley and Junko Fujita

TOKYO, Aug 17 (Reuters) - Japanese government bond (JGB) yields ticked higher across the curve on Thursday as investors took in a string of positive domestic economic data, a weak yen and a lukewarm response to an auction of 20-year bonds.

The 20-year yield hit 1.375%, its highest since late January and a rise of 8 basis points from the day's lows before it settled around 1.34%.

The Ministry of Finance sold about 992.5 billion yen ($6.78 billion) of the bond at an average yield of 1.322%, with the yield at 1.385% for the lowest accepted price.

Traders pointed to the low 2.8 bid-to-cover ratio for this bond, compared with the strong 3.5 ratio at last week's 30-year auction as the reason for the rise in yields.

"The buyers for the 30-year bonds were mainly life insurers, which had been steadily buying 30-year bonds (before the auction," said Kaoru Shoji, Japan rates strategist at SMBC Nikko Securities.

"On the other hand, banks and pension funds were the main players in the 20-year bond auction. For them, the current level might not be cheap enough as yields may rise further as U.S Treasury yields are rising, and there is speculation that the BOJ may end its negative-rate policy.”

Yields on other tenors inched up too. The five-year yield rose 2 bps to 0.225%. While still far from the defacto upper bound of 1% that the Bank of Japan has set, the 10-year JGB yield hit 0.655%, up from a low of 0.565% last week.

The move comes after GDP figures surprised to the upside.

The BOJ keeps short-term rates negative and caps 10-year yields at 0.5% under its yield curve control policy, although its latest policy tweak allows the 10-year yield to move as far as 1%.

Despite some speculation of a possible hawkish move, analysts say the BOJ still looks poised to hold onto its super-easy monetary policy for the near term.

Meanwhile, Fed minutes released on Wednesday indicated that "most" policymakers continued to prioritise the battle against inflation, once again highlighting the wide gap between U.S. and Japanese monetary stances.

The yen is at its weakest level this year, trading around 146.40 to the dollar.

Since the monetary policy meeting at the end of July, investors have been carefully testing to see how much the BOJ will allow yields to rise. The last time the 10-year yield hit 0.655 the central bank stepped in with an emergency bond-buying operation.

The results of the auction came as a "surprise," said Shoki Omori, chief desk strategist at Mizuho Securities, with demand coming in extremely weak.

Omori said the 20-year bond was an outlier because of the absence of a defined buyer profile and that most people with short positions in JGBs had bought before the auction. ($1 = 146.3800 yen) (Reporting by Brigid Riley; Editing by Sohini Goswami)