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JGBs edge lower, 10-year auction met with lukewarm demand

TOKYO, Sept 5 (Reuters) - Japanese government bond prices edged lower on Tuesday with an auction for 10-year debt drawing lukewarm demand from investors.

The 10-year JGB yield was half a basis point higher at minus 0.005 percent.

The 10-year yield had declined below zero percent over the past week for the first time since mid-November as tensions in the Korean Peninsula have generated safe-haven bids for government debt.

Monday's 2.3 trillion yen ($21.05 billion) 10-year JGB auction did not generate strong demand as the maturity's yield was seen to have declined too low for many potential buyers.

The bid-to-cover ratio, a gauge of demand, slipped to 3.95 from 4.21 at the previous auction in August.

Losses for safe-haven JGBs, however, were limited as geopolitical tensions continued to simmer, with Japan's Nikkei dropping 0.6 percent on risk aversion. ($1 = 109.2800 yen) (Reporting by the Tokyo markets team)