TOKYO, Feb 1 (Reuters) - Japanese government bond futures edged down on Thursday, giving up early gains led by a rally in U.S. Treasuries, as investors were wary that domestic yields were too low compared with overseas fixed-income markets.

A 0.8 percent rise in the Nikkei share average .N225 to a 10-month closing high also kept investors careful about chasing JGBs higher, traders said.

"Bond buying prompted by a rebound in U.S. Treasuries was not that aggressive," said a senior trader at a foreign brokerage. "Absolute interest rate levels of domestic bonds are so low that investors cannot overlook them."

March 10-year JGB futures fell 0.07 point to 134.44 2JGBv1 after rising as high as 134.76 in early trade.

The benchmark 10-year JGB yield was up one basis point at 1.705 percent JP10YTN=JBTC, while the two-year yield climbed 1.5 basis points to 0.730 percent.

Losses were limited as doubts about a Bank of Japan rate rise this month kept investors hesitant about selling bonds heavily, traders said.

Receding expectations that the BOJ will raise the overnight call rate to 0.5 percent from the current 0.25 percent at its policy meeting on Feb. 20-21 helped ensure a smooth 10-year auction -- the second JGB offering this week.

Treasuries rose on Wednesday after the Federal Reserve held interest rates steady at 5.25 percent and investors read the Fed's policy statement as a signal that the chances of any U.S. rate increase this year were slim.

A rise in U.S. Treasury yields to five-month highs last week had dampened investor sentiment in JGBs, and market players had been worried that further rises in U.S. yields could hold back domestic bonds.