UPDATE 2-Bond gains seen offsetting stock loss at Japan banks

(Adds data on unrealised stock gains)

TOKYO Jan 22 (Reuters) - Japanese banks' gains on bond holdings are likely to offset unrealised losses sparked by plunging equity prices, the head of the Japanese Bankers Association said on Tuesday.

Masayuki Oku, head of the industry group and president of the core banking unit of Sumitomo Mitsui Financial Group (8316.T), also told a news conference that Japan could see an economic slowdown in the future.

Unlike their U.S. rivals, Japanese lenders have so far avoided heavy losses from risky subprime investments. However, Oku acknowledged banks could face unrealised losses on their stock holdings due to the recent market fall-out.

"(Market losses) will have an effect on stock holdings, you can see that just by looking at stock prices. However, Japanese banks have considerable bond holdings ... so the two will likely cancel each other out," Oku said at regular news conference.

As of Tuesday's market close, unrealised gains on stock holdings at Japan's six largest banks totalled around 3.4 trillion yen ($32 billion), according to estimates by Dai-Ichi Life Research Institute.

That is down nearly 58 percent since the end of September, and the lowest since the end of June 2005, according to the Dai-Ichi Life estimates.

Japanese government bond futures jumped to a 28-month peak on Tuesday as Tokyo shares fell nearly 6 percent following sell-offs in global equity markets that sent investors fleeing for the safety of bonds.

Oku also said there was a possibility the world's second-largest economy could see a slowdown.

"The gradual expansion of the economy has been continuing .... However, there is a possibility of a slowdown in the future." (Reporting by David Dolan)