JGBs slip; superlong tenors dip ahead of Thursday's 20-yr sale

TOKYO May 23 (Reuters) - Japanese government bonds slipped on Wednesday, with the 20-year tenor underperforming as investors prepared for the next session's sale in that sector.

* The JGB market also awaited the outcome of the Bank of Japan's two-day meeting which began on Tuesday, for clues whether the BOJ intends to tweak its operations after it missed its target for buying government bonds twice last week.

The central bank is widely expected to refrain from any major policy changes.

Bank of Japan Governor Masaaki Shirakawa will talk to media later on Wednesday after the meeting.

* The JGB market shrugged off Fitch's move late on Tuesday to cut Japan's long-term foreign currency rating to A plus from AA and the local currency rating to A plus from AA minus, with a negative outlook for both. The ratings agency cited the country's political barriers to passing policy to rein in its debt.

* "[The downgrade] didn't have any substantial impact on JGBs so far. The JGB market is positioning itself for tomorrow's 20-year JGB auction, so that's why the superlong end of the curve is trading weaker while the short- and medium-term sectors are steady," said Naomi Hasegawa, senior strategist at Mitsubishi UFJ Morgan Stanley Securities.

"It seems that some investors failed to join the recent market rally, so there's decent demand to buy on dips, so we expect fair demand at the auction," she added.

* Investors also awaited a meeting of European Union leaders later on Wednesday, who are expected to consider a plan for regional bonds to be jointly underwritten by all euro zone member states, aimed at containing the region's debt crisis.

* The front-month 10-year JGB futures contract ended morning trading down 0.02 point at 143.23.

* The 10-year bond yield edged up half a basis point to 0.860 percent, moving further away from Friday's low of 0.815 percent, which was its lowest level since July 2003.

* The 20-year yield gained 2 basis points to 1.655 percent, while the 30-year bond yield also added 2 basis points to 1.810 percent.