* BOJ begins long-term JGB purchases
* Ten-year yield falls, but still off record low of 0.315 pct
* Nikkei climbs as much as 3.1 pct to above 13,000
By Dominic Lau
TOKYO, April 8 (Reuters) - The Nikkei share average climbed as much as 3.1 percent to hover near a 5-year high on Monday, and bond prices inched up as investors responded positively to the Bank of Japan's move to begin buying longer-dated bonds immediately to beat deflation.
The central bank conducted its first government bond buying operations on Monday and said it will buy 1 trillion yen of JGBs with maturities of between five and 10 years, and 200 billion yen of bonds with maturities exceeding 10 years.
Japanese government bond prices edged higher, although trading was less volatile than on Friday when investors pocketed some of the sharp gains, a day after the central bank announced its sweeping monetary stimulus measures to revive the world's third-largest economy.
"The BOJ's bazooka has sparked the buying of Japanese stocks, especially domestic sectors, like real estate," said Yasuo Sakuma, a portfolio manager at Bayview Asset Management. "I am overweight domestic demand sectors rather than exporters."
"Weaker yen is good for Japanese stocks, especially exporters. But the global economy...is relatively weak. Europe is still in a slump, and the recovery pace of developing countries like China and India is slower than expected."
The Nikkei was up 2.3 percent at 13,127.65 in late morning trade, after earlier rising to 13,225.22, levels last tracked in August 2008. The market shrugged off a weaker-than-expected U.S. jobs report that raised concerns that the recovery in the world's largest economy may be losing steam.
Real estate companies gained 4.3 percent, outpacing the broader market once again after jumping nearly 12 percent on Friday.
The sector has surged nearly 110 percent since mid-November, when Prime Minister Shinzo Abe unveiled in his election campaign bold expansionary fiscal and monetary policies to revive the world's third-largest economy. That compares with a 51 percent rally in the benchmark Nikkei during the same period.
Lenders Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group rose between 2.4 and 4.6 percent.
Apart from real estate companies, Sakuma said he also preferred consumer financing firms as well as venture capital firm Jafco Co Ltd, which surged 8.4 percent.
Major exporters such as Canon Inc, Toyota Motor Corp and Honda Motor Co were also in demand, up between 2.6 and 3 percent as the yen fell as much as 1.3 percent to 98.85 to the dollar, the lowest since June 2009.
JGB YIELDS DOWN
Yields on Japanese government bonds slipped as the BOJ started its stimulus operations. The 10-year fell 4 basis points to 0.490 percent, after it swung violently from a record low of 0.315 percent to a three-week high of 0.600 percent in Friday's trading.
The BOJ's massive stimulus steps promise to inject $1.4 trillion into the economy in less than two years by buying government bonds across the yield curve as well as riskier exchange-traded funds.
One of the BOJ's aims is to drive long-term interest rates lower in the hope that Japanese companies will increase their investments and households will raise their spending.
"We think the 10-year yield will approach 0.20 percent in the coming months," said Maki Shimizu, senior strategist at Citigroup in Tokyo.
But credit ratings agency Moody's Investors Service said the central bank's effort merely buys time for the government to implement a credible structural reform and fiscal consolidation plan.
The five-year yield dipped 2 basis points to 0.160 percent, but the 20-year yield added 1 basis point to 1.140 percent.
Ten-year JGB futures rose 0.88 point to 144.90 after earlier hitting a high of 145.02.