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JGBs edge up as investors await 5-year sale results

TOKYO, June 12 (IFR) - Japanese government bond prices ended the morning session slightly higher on Thursday, but moves were limited ahead of this session's sale of 5-year notes.

A modest fall in U.S. Treasury yields and stock prices overnight, as well as a drop in the Nikkei stock average , also had some positive impact on JGB market sentiment.

The Ministry of Finance offered 2.7 trillion yen ($26.44 billion) of 5-year JGBs with the coupon on the new issue (number 118, maturing June 20, 2019) set at 0.2 percent for the 9th straight month.

JGB market participants expected the auction to go smoothly as many domestic institutional investors, including commercial banks, seem willing to park funds in 5-year JGBs.

According to money managers and JGB traders, many regional banks are expected to buy the new 5-year JGBs in larger-than-usual lots in Thursday's auction ahead of June 20's massive quarterly redemption of JGBs.

The yield on the current 5-year JGBs slipped 0.5 basis point from Wednesday to 0.175 percent, while the 10-year yield also inched down 0.5 basis point to 0.595 percent.

In the superlong zone, the 20-year yield shed 1 basis point to 1.445 percent, ahead of next Tuesday's monthly sale of 1.2 trillion yen of 20-year JGBs. The 30-year yield edged down 0.5 basis point to 1.705 percent.

Ten-year lead September JGB futures moved in a narrow 145.22-145.29 range before finishing the morning session up 0.10 point at 145.26. ($1 = 102.1100 Japanese Yen)

(Reporting by Masatsugu Hisatsune; Editing by Eric Meijer)