JGBs slip ahead of 30-yr sale; caution ahead of ECB limits moves

TOKYO, Sept 6 (Reuters) - Japanese government bond prices fell slightly on Thursday as some investors made room in their portfolios to buy at an offering of 30-year bonds, but moves were limited ahead of a European Central Bank meeting later in the day.

* The Ministry of Finance offered 700 billion yen ($8.9 billion) of 30-year bonds with a coupon of 1.90 percent, down from 2.0 percent at the past eight sales and below the 2.0-percent level for the first time since July 2003.

* Later on Thursday, ECB President Mario Draghi is expected to unveil a framework for the central bank's new bond-buying programme to help bring down the borrowing costs of debt-burdened Spain and Italy.

Sources said the ECB is ready to waive seniority status on government bonds it buys under the plan, but added that it is unlikely it will announce that the bond purchases would be unlimited, or set even internal targets for yields or spending.

* "There are still many unknowns, and the continued flight-to-quality could help demand at the 30-year sale," said a fixed-income fund manager at a Japanese trust bank.

* Credit Suisse strategists recommended preparing for the risk of a near-term rise in yields by building 7-year/30-year and 10-year/30-year flatteners using the 30-year auction as a tactical trade.

Flatteners are positions to bet on or hedge against the possibility that the yield gap between maturities will shrink.

"As yields rise, we expect the 7-year to 10-year sectors to underperform, and the yield curve to be vulnerable to bear flattening pressure, as was the case during the rise in yields that occurred toward late August," they said in a note to clients.

* The 10-year JGB futures contract for September slipped 0.07 point in morning trade to 144.10.

* In the cash bond market, the 10-year bond yield added 1 basis point to 0.805 percent.

* Longer maturities underperformed, with the 30-year bond yield rising 1.5 basis points to 1.875 percent and the 20-year bond yield up 2 basis points at 1.655 percent.