JGB futures gain, funds continue covering shorts

TOKYO Nov 13 (Reuters) - Japanese government bond futures rose on Friday, riding on upward momentum from the previous day's robust five-year auction results, with speculators covering short positions as recent bearish sentiment continued to recede.

* December 10-year futures 2JGBv1 were up 0.46 point at 138.95 after hitting 138.89. Futures have surged over a full point over the past three days, and got a big lift on Thursday after the well-received five-year debt sale helped allay concerns over Japan's fiscal situation.

* Market players said foreign funds including commodity trading advisers continued to cover short positions in JGB futures on Friday, adding that some of the funds were selling stock futures as well.

* Tokyo's Nikkei stock average .N225 lost 0.6 percent. [.T]

* Thursday's robust five-year results went some way to soothing bearish market sentiment, which had resulted in a string of poorly received auctions over the past month and taken the benchmark 10-year yield to a five-month high.

* But fiscal concerns lingered as details about the government's possible extra issuance for the current fiscal year and next year were yet to be seen.

* The market is bracing for Japan to issue more JGBs for the current fiscal year through March 2010 to offset an expected tax revenue shortfall. It is also keeping a close eye on next fiscal year's government spending plans and how much bond issuance that may entail.

* The five-year yield fell 1 basis point to 0.640 percent JP5YTN=JBTC. The benchmark 10-year yield dropped 2 basis points to 1.350 percent JP10YTN=JBTC. It had touched a five-month high of 1.485 percent earlier this week. (Reporting by Shinichi Saoshiro; Editing by Chris Gallagher)