TOKYO, July 3 (Reuters) - Japanese government bond (JGB) yields struggled for direction on Wednesday, as investors weighed the risk of the Bank of Japan (BOJ) raising interest rates again at its meeting this month where it will announce specifics of its bond purchase tapering plan.

As the yen hovers around its weakest against the dollar since December 1986, market players were split on whether Japan's central bank will hike rates in July to slow the currency's fall in what would be its second hike this year.

Although still not their base case, with the yen continuing to flail, the possibility that the BOJ may hike rates this month has increased, said Yurie Suzuki, a market analyst at Mizuho Securities.

"I think it's a risk scenario that can't be ignored."

Investors also remained cautious about the pace and size of the BOJ scaling back its nearly $5 trillion balance sheet. The bank has said it will specify the details at its July monetary policy meeting after speaking with bond market participants.

Moves in the market were relatively modest amid the uncertainty. The 10-year JGB yield fell 0.5 basis point to 1.095%, edging down from a 13-year peak of 1.1% that it first hit at the end of May.

Buying was most concentrated among two- and five-year notes on Wednesday, with the two-year JGB yield ticking down 1.5 bps to 0.345% and the five-year yield also easing 1.5 bps to 0.59%.

"There is demand for shorter duration notes due to current interest rate risks, so medium-term JGBs are still an attractive buy," said Mizuho Securities' Suzuki.

Investors were also awaiting an auction for 30-year bonds scheduled for Thursday.

Ahead of the auction, the 30-year JGB yield rose 1.5 bps to 2.27%.

The 20-year JGB yield was up 1.5 bps at 1.935%, its highest since July 2011.

(Reporting by Brigid Riley; Editing by Mrigank Dhaniwala)