* 10-yr futures erase gains but end above 5-day moving average
* Record high bid-to-cover ratio at smooth 2-yr sale
TOKYO, Oct 25 (Reuters) - Benchmark Japanese government bonds fell slightly on Thursday, underpinned by growing expectations for more easing at the Bank of Japan's meeting next week but also pressured as those expectations weakened the yen and lifted stocks.
The dollar rose as high as 80.14 yen on trading platform EBS, its highest level since late June, which helped the Nikkei stock average soar 1.1 percent to a four-week closing high.
Japan's central bank is leaning towards deciding on additional easing steps at its next meeting on Tuesday, sources said.
The Nikkei business daily reported in its evening edition on Thursday that the BOJ will likely raise the target of its asset purchase programme by 10 trillion yen. The Nikkei report fueled easing expectations, although the amount of the increase was less than some market participants' hopes for an additional 20 trillion yen.
``The BOJ wants to avoid a negative surprise about their policy announcement, so that's why they want to lower expectations now, approaching the meeting,'' said Maki Shimizu, senior strategist at Citigroup Global Markets Japan.
The benchmark 10-year JGB yield was flat for most of the day but inched up half a basis point to 0.775 percent after the dollar's jump.
The 10-year JGB futures contract closed down 0.04 point at 144.04, after ending morning trade up 0.02 point. Futures hit a session high of 144.14, just shy of resistance at their 20-day moving average, now at 144.15. Support was seen at their 5-day moving average, now at 144.02.
Longer maturities steadied, with yields on 30-year debt flat at 1.944 percent. They earlier added h alf a basis point to 1.960 percent, retracing Wednesday's high, which was their highest level since April 5.
Yields on 20-year bonds were also flat at 1.695 percent.
``There are potential buyers in the superlong sector, particularly life insurers, but everyone appears to be holding off until after the BOJ,'' said a fixed-income fund manager at a European asset management firm in Tokyo.
The BOJ now buys bonds with up to three years left to maturity in its asset purchase programme, which has effectively pinned yields of shorter maturities and removed most of the suspense from short-term debt sales.
The Ministry of Finance offered 2.7 trillion yen in 2-year notes with a coupon of 0.10 percent, matching the coupon at the previous 10 sales and also matching the interest the central bank pays on its current account excess reserves. The sale drew bids of a record 14.9 times the amount offered, up from the previous sale's robust bid-to-cover ratio of 11.3.
The latest 2-year JGB bucked the overall market after the sale, with its yield inching down half a basis point to 0.095 percent.