JGBs fall after robust Japan data, CPI stops falling
* Ten-yr JGB yield posts sharpest qtrly rise in 5 years
* JGB 20-, 30-yr yields mark biggest qtrly rise in 9 years
TOKYO, June 28 (Reuters) - Benchmark 10-year Japanese government bond prices edged down on Friday, hurt by data that showed Japan's consumer prices stopped falling in May for the first time in seven months and industrial production rose more than expected.
The 10-year yield was up 1 basis point at 0.845 percent, reversing an earlier fall on the back of lower U.S. Treasury yields overnight. During intraday trade, it fell as much as 0.825 percent to a one-week low.
In further signs Tokyo's expansionary policies are making some progress towards ending 15 years of deflation, Japan's consumer prices stopped falling in May and labour demand reached its strongest level in five years.
Industrial production rose more than expected in May in a sign of strength in the corporate sector.
"There are some auctions coming up in July, so supply will be in focus again," said Ayako Sera, senior market economist at Sumitomo Trust Bank. "There are also external factors, investors are still warily watching developments in China ... and are waiting to see what the U.S. payrolls report says, so it is easy to expect a more uncertain mood."
"But today, the domestic stocks are strong, and the Japan data were upbeat, so the market is following that."
The Ministry of Finance is to sell 2.4 trillion yen ($24.4 billion) of 10-year bonds on Tuesday, followed by an auction of 600 billion yen, 30-year bonds on Thursday.
The 10-year yield has consolidated in a range of 0.80 to 0.90 percent in recent weeks after dropping to a record low of 0.315 percent a day after the Bank of Japan unveiled its massive easing scheme in early April, and then climbed to a high of 1.0 percent on May 23.
Still, it has risen 28.5 basis points this quarter, its sharpest quarterly increase in five years, although for the year, it has climbed only 5 basis points.
Royal Bank of Scotland recommended investors sell 10-year JGBs on strength at around 0.80 percent.
"The JGB market exhibited considerable strength this week by not selling off at all during the Treasury yield upswing and then attracting buyers when Treasuries reversed course in the second half of the week," it wrote in a note.
"Yields saw additional downward pressure because of a steady flow of BOJ buying operations amid a dearth of auctions with large supply since last week's FOMC meeting and expectations for month-end lengthening demand."
Ten-year JGB futures were steady at 142.70 on Friday. They were down 2.74 points this quarter, their biggest quarterly drop since October-December 2010.
The 20-year yield added 0.5 basis point to 1.695 percent and the 30-year yield put on 1 basis point to 1.825 percent.
The 20-year yield had risen 32 basis points in April-June, its biggest jump in nine years, while the longer-dated 30-year yield had gained 31.5 basis points this quarter, also its sharpest quarterly rise in nine years.