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Benchmark JGBs inch down; next week's 20-year sale eyed

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TOKYO, Oct 12 (Reuters) - Benchmark Japanese governmentbonds were set to end their three-session gaining streak onFriday, as investors were hesitant to chase prices higher afteryields closed at a nine-week low in the pervious session.

* The benchmark 10-year yield rose half abasis point to 0.755 percent, after closing its lowest levelsince Aug. 7 on Thursday.

* Ten-year JGB futures ended morning trade down0.04 point at 144.29, after earlier nudging up to 144.34, whichwas their highest level since Aug. 7.

* A 30-year bond sale on Thursday met strong demand, raisingsome investors' hopes for next Thursday's 20-year sale, butothers were concerned that next week's sale will fall short ofexpectations.

* "The 30-year was undervalued so demand was strong, but20-year JGBs aren't as attractive, and they're also not asappealing to those who are actively buying in the 10-year sectorbecause they are too long for investors just seeking carry,"said a fixed income fund manager at a Japanese asset managementfirm in Tokyo.

* The superlong tenor was steady, with yields on 20-yearbonds flat at 1.645 percent and yields on 30-yeardebt also flat at 1.920 percent.

* Rating agency Moody's Investors Service's senior vicepresident and regional credit officer Tom Byrne told reporterson Friday that Japan's politicians still have some time to bringdown debt as government bond yields are likely to remain low andthe current account balance is likely to remain in surplus forthe time being.

* Japanese Economics Minister Seiji Maehara said he willdiscuss the pain a strong yen is inflicting on exports when hemeets later on Friday with U.S. Federal Reserve Chairman BenBernanke and European Central Bank President Mario Draghi, whoare in Tokyo for the International Monetary Fund meetings.

(Reporting by Lisa Twaronite; Editing by Eric Meijer)

((lisa.twaronite@thomsonreuters.com)(81 3 6441 1870 ReutersMessaging: lisa.twaronite.thomsonreuters.com@reuters.net))

Keywords: MARKETS JAPAN JGB/

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