JGB yield curve flattens after steady 40-year auction

TOKYO, July 25 (Reuters) - Japanese government bond prices were steady to a touch firmer on Tuesday, with the yield curve flattening after a 40-year debt auction was well received by investors.

The benchmark 10-year JGB yield was unchanged at 0.065 percent, while the 30-year yield and 40-year yield dipped half a basis point to 0.860 percent and 1.065 percent, respectively.

The bid-to-cover ratio, a gauge of demand, at Tuesday's 500 billion yen ($4.51 billion) 40-year JGB auction rose to 3.20 from 2.87 at the previous sale in May.

The 40-year JGBs were seen to have drawn ample demand due to their relatively high yield.

Overall, market movements were limited before the Federal Reserve's two-day policy meeting that begins later on Tuesday.

The Fed meeting could have an impact on Treasury yields, which sank to three-week lows last week, and a wait-and-see mood prevailed as JGBs are often impacted by moves in their U.S. counterparts.

($1 = 110.9500 yen) (Reporting by the Tokyo markets team; Editing by Richard Borsuk)