JGB futures slip as stocks up, but trade data helps

* Higher stocks, U.S. mortgage firm rescue plan hurt JGBs

* JGB losses trimmed on unexpected fall in Japan's exports

* MOF's 20-year auction seen drawing fair demand

By Rika Otsuka

TOKYO, July 24 (Reuters) - Japanese government bonds slid for a third straight day on Thursday as oil's retreat from record highs boosted stock prices, prompting investors to shift funds to equities from government debt.

Optimism about a rescue plan for ailing U.S. mortgage finance companies Fannie Mae FNM.N and Freddie Mac FRE.N helped ease jitters about the U.S. financial sector, reducing safe-haven bids for U.S. and Japanese government bonds.

But the JGB market trimmed early losses after Japan's exports unexpectedly fell in June for the first time in nearly five years. [JP/TRADE1].

Thursday's government data raised concerns about profits at Japanese exporters, which have driven economic growth.

"The trade data certainly is a supportive factor for JGBs," said Tetsuya Miura, a bond strategist at Shinko Securities.

"Economic fundamentals would not support a further rise in JGB yields if the economy can no longer rely on exports," Miura said.

September 10-year futures 2JGBv1 were down 0.22 point to 135.28 after falling as low as 135.15 in early trade. The lead contract has dropped since hitting a two-month high of 136.79 last week.

The benchmark 10-year yield JP10YTN=JBTC rose 2.5 basis points to 1.665 percent, having climbed from a three-month trough of 1.530 percent last week.

Activity was subdued as investors were cautious ahead of the Ministry of Finance's 800 billion yen ($7.4 billion) auction of 20-year bonds later in the day.

Thursday's debt sale is expected to attract fair demand after last week's auction of 30-year paper went smoothly and showed solid demand for longer-dated bonds. Analysts said the steepening of the yield curve in the past month should encourage investors such as life insurers to buy the 20-year bonds.

Traders expect the coupon to be set at 2.3 percent, down 0.1 percent from the previous two auctions in the same maturity.

The yield on the current No. 102 20-year bond was up 1.5 basis points at 2.270 percent JP20YTN=JBTC after hitting a one-month high of 2.275 percent in early trade.

The Nikkei stock average .N225 was up 0.9 percent in early trade, led higher by financials. [.T] (Editing by Edwina Gibbs)