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JGBs snap three sessions of gains as investors take profits

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* 10-yr yield pulls away from previous session's 9-week low

* Futures extend losses in afternoon

By Lisa Twaronite

TOKYO, Oct 12 (Reuters) - Japanese government bonds rose forthe first time in four days, as investors took profits afterbenchmark yields closed at a nine-week low in the previoussession.

The benchmark 10-year yield rose 1.5 basispoints to 0.765 percent.

Ten-year JGB futures extended losses in afternoontrading, with selling by hedge funds cited, and ended down 0.11point at 144.22. Futures closed the morning session at 144.29after nudging up to 144.34, which was their highest level sinceAug. 7.

"The JGB market followed the Treasury market overnight,which makes sense. If overseas yields keep declining in a range,then JGBs will follow suit," said Maki Shimizu, seniorstrategist at Citigroup Global Markets Japan.

U.S. Treasuries rose on Thursday and were supported in Asiaon Friday, with the benchmark 10-year yield staying near thisweek's low, as investors worried about corporate earnings andthe outcome of the U.S. presidential election.

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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.

But Byrne warned that a stand-off between Japan's governmentand opposition parties is a concern as it has stalled importantlegislation needed to fund government spending.

For now, those political risks have taken a backseat toconcerns about the impact of Europe's crisis on global growth,which has stoked demand for safe-haven fixed income assets.

"It's hard to price in the fiscal risk, unless it becomesmore recognizable. It's more the global slowdown, penetratingthe market," said Citigroup's Shimizu.

A 30-year bond sale on Thursday met strong demand, raisingsome investors' hopes for next Thursday's 20-year auction, 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.

Superlong bonds also lost ground on Friday, with yields on20-year bonds up 1 basis point at 1.655 percentand yields on 30-year debt up half a basis pointat 1.925 percent.

The Ministry of Finance will also offer 5-year notes onTuesday.

(Editing by Edwina Gibbs)

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

Keywords: MARKETS JAPAN JGB/

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