JGBs slip slightly as investors look ahead to auctions

TOKYO May 11 (Reuters) - Japanese government bond prices dropped slightly on Fridayas investors continued to take profits after most yields hit 19-month lows this week, and looked ahead to auctions next week for the latest clues on demand.

* The Ministry of Finance will sell 4 trillion yen of 40-year bonds on Tuesday, followed by an offering of 2.5 trillion yen of 5-year notes on Thursday.

* "Even with yields at such low levels, the auctions are expected to go smoothly, because Japanese investors still think JGBs are a good place to put funds, and the Bank of Japan's policy still supports the short end," said a fixed-income fund manager at a Tokyo asset management firm.

* The shorter tenors have outperformed since the Bank of Japan announced surprise easing steps on Feb 14. The central bank purchased bonds with up to two years left to maturity in its asset buying programme and extended that to three years in April. Many market participants expect that to be eventually extended to five years.

* The 10-year JGB yield rose half a basis point to 0.865 percent, moving away from 0.845 percent hit several times this week, which was its lowest level since October 2010.

* The 10-year JGB futures June contract ended the morning nearly flat, up 0.01 point at 143.16.

* The 20-year JGB yield added 1 basis point to 1.655 percent, while the five-year JGB yield was flat at 0.250 percent.