UPDATE 1-Japan's 10-year bond yield hits BOJ's policy limit on new governor report

(Rewrites throughout with 10-year yield movement)

By Junko Fujita

TOKYO, Feb 10 (Reuters) - Japan's 10-year government bond yield hit the top end of the Bank of Japan's policy band after a report said the Japanese government was set to appoint an economist as the central bank's next governor.

The 10-year JGB yield rose 1 basis point to 0.50%, rising to the upper end of the BOJ's trading band for the first time since Jan. 18.

The Japanese government has decided to nominate academic Kazuo Ueda as the next governor of the BOJ, and former head of Japan's Financial Services Agency Ryozo Himino and BOJ executive Shinichi Uchida as deputy governors.

The news was first reported by the Nikkei business daily.

"This is a surprise move. I think the new team means that they will redesign the BOJ's monetary policy, (and) not maintain the current policy," said Takayuki Miyajima, senior economist at Sony Financial Group.

The five-year yield rose 0.5 basis point to 0.205%, rebounding from a fall to 0.195% earlier after the BOJ's announcement of an extension of loans against collateral.

The BOJ earlier in the day said it would extend five-year loans against collateral to financial institutions, a move to contain elevated yields.

The BOJ last month amended rules for the funds-supply operation, so it can pump funds extending up to 10 years to financial institutions against collateral.

But market participants say its effect will be limited and the measure may not be sustainable.

"I am not sure how many more times the BOJ can conduct such operations," said Kazuhiko Sano, a strategist at Tokai Tokyo Securities.

"Because, in part, it is difficult for financial institutions to secure collateral as they need collateral for BOJ's other operations such as bond lending."

The BOJ last conducted such an operation on Jan. 31, after the five-year yield hit 0.2%. (Reporting by Junko Fujita; Editing by Savio D'Souza and Emelia Sithole-Matarise)