JGBs flat; BOJ eases, but split vote clouds outlook

* BOJ doubles supply amount for 3-month funding operation

* 2-yr yield briefly hits 4-½ year low, futures inch lower

* BOJ's decision within expectations

* Split BOJ vote clouds prospects for more easing

By Shinichi Saoshiro

TOKYO, March 17 (Reuters) - Japanese government bonds barely budged on Wednesday after the Bank of Japan loosened monetary policy in a split vote that left traders guessing over whether it will continue easing in months ahead.

The BOJ, after a drumbeat of further government pressure for fresh action to beat deflation, on Wednesday doubled the scale of a three-month fund supply tool it adopted in December to 20 trillion yen ($221 billion). [ID:nSGE62G03I] [ID:nTOE619091]

But the policy board's split 5-2 vote suggested the board may have had difficulty justifying the move.

"The split vote leaves an impression that it will become more difficult to get a consensus from board members for additional easing measure even if the governor and deputy governors respond to political pressures," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

June 10-year JGB futures 2JGBv1 inched down 0.06 point to 138.90 after dipping to 138.84 following the BOJ's announcement.

"If the vote was unanimous, it would have kept prospects alive for the BOJ to continue increasing the amount of funds offered through its new operation," said Takeo Okuhara, fund manager at Daiwa SB Investments.

"But the vote was split, and the bond market is beginning to factor in the possibility of the BOJ winding down with its easing. Extending the duration of the operation to six months is still a possibility -- an option in more extreme cases such as the dollar falling to 85 yen."

The dollar stood at 90.60 yen JPY= on Wednesday, having pulled back from a three-month low of 88.14 yen hit on trading platform EBS earlier in the month. [FRX/]

The two-year yield JP2YTN=JBTC was unchanged at 0.140 percent after brushing a 4-½ year low of 0.135 percent in a knee-jerk reaction to the BOJ decision, but analysts see little room for a further decline in the absence of more easing.

The five-year yield JP5YTN=JBTC was also flat, at 0.500 percent and the benchmark 10-year yield JP10YTN=JBTC dipped 0.5 basis point to 1.335 percent.

The 20-year yield JP20YTN=JBTC was unchanged at 2.160 percent after a well-received auction of the maturity the previous day.

The five-year/20-year yield spread was 166 basis points, near a decade-wide figure above 167 basis points hit last week.

Tokyo's Nikkei stock average .N225 rose 0.9 percent after hitting an eight-week high. [.T]

Market players said the bond market's focus could shift more towards stocks rising on hopes for a further economic recovery with the BOJ meeting out of the way. (Editing by Hugh Lawson)