JGBs fall as econ hopes hit Treasuries, lift Nikkei

TOKYO Aug 10 (Reuters) - Japanese government bonds fell on Monday, with the September 10-year futures reaching a seven-week low as the latest signs of an economic recovery hit U.S. Treasuries while sending Tokyo's Nikkei stock average .N225 to a 10-month high.

* The yield on the U.S. 10-year Treasury note US10YT=RR rose to a near two-month high on Friday after a monthly employment report showed that the pace of U.S. job losses in July was slower than anticipated, supporting expectations of an economic recovery. [US/] [ID:nN06337602]

* The Nikkei advanced 1.4 percent, having earlier been up as much as 1.7 percent at a 10-month high, boosted by the U.S. jobs data. The stock index was also lifted as Japan's core machinery orders rose 9.7 percent in June, the first monthly gain in four months. [.T] [ID:nT195237]

* "One of the key events this week is the Fed meeting. The focus is on what the Fed will do about its bond purchases. The meeting is a chance to gauge the Fed's monetary policy stance after the Bank of England's move last week," said Koji Ochiai, senior market economist at Mizuho Investors Securities.

* The BoE surprised last week by extending its quantitative easing programme by raising the size of its bond purchase scheme to an unexpectedly large 175 billion pounds. [ID:nL6430949]

* September 10-year futures 2JGBv1 lost 0.33 point to 137.26 after hitting 137.22, lowest since June 24.

* The 30-year JP30YTN=JBTC and 20-year JP20YTN=JBTC yields both climbed 2.5 basis points, to 2.345 percent and 2.175 percent, respectively.

* The benchmark 10-year yield rose 2.5 basis points to 1.455 percent JP10YTN=JBTC, and the five-year yield JP5YTN=JBTC climbed 2 basis points to 0.735 percent.

* The 10-year/30-year yield spread was unchanged at 89 basis points after steepening to an 11-month high above 90 basis points late in July. (Reporting by Shinichi Saoshiro; Editing by Hugh Lawson)