JGBs little changed, 40-yr auction results in focus

*JGBs sit tight as investors await 40-year debt sale results

*MOF's 200 billion yen auction of 40-year bonds expected to draw solid demand

By Rika Otsuka

TOKYO, May 13 (Reuters) - Japanese government bonds were little changed on Tuesday as investors retreated to the sidelines to await the results of a 40-year debt auction.

The mood was supported after Bank of Japan Governor Masaaki Shirakawa on Monday confirmed the central bank's neutral stance on interest rates. The BOJ dropped its bias towards raising rates last month.

Shirakawa said that while the BOJ would raise rates if uncertainties over the economy cleared, it would be appropriate to keep them on hold or even cut them if the economy were hurt by rising energy prices. [ID:nTKF003146]

"Many investors are willing to buy JGBs. It's just that they do not want to be the first one to do so after seeing such an unstable market," said Mari Iwashita, senior market economist at Daiwa Securities SMBC.

Investors need to pick up bonds to replace many JGBs scheduled to be redeemed next month, analysts said. JGBs with durations of five years or longer mature in March, June, September and December.

June 10-year futures were up 0.01 point at 136.26 2JGBv1.