JGBs fall as investors wary before 10-yr sale, Fed

* JGBs fall on investor caution before 10-year auction

* Investors also awaiting Fed's rate decision

* Global growth concerns continue to lend support to JGBs

By Chikako Mogi

TOKYO, Aug 4 (Reuters) - Japanese government bonds fell on Monday, pulling the benchmark 10-year yield away from three-month lows, as investors grew wary of buying ahead of a key auction the next day.

Market players were also reluctant to take big positions before the Federal Reserve's policy decision due on Tuesday and a post-meeting statement.

Investors are taking a wait-and-see stance until key events are out of the way, because they are not in a hurry to buy now when JGB yields are likely to fall on growing concerns about Japanese, U.S. and euro zone growth, traders said.

"Prices are already at the higher end of recent ranges and investors have no reason to buy now before the 10-year JGB auction and the Fed meeting," said a dealer at a Japanese bank.

"Investors don't want to push 10-year yields below 1.5 percent before the auction, as yields are expected to gradually inch lower given the bleak growth outlook for the Japanese, U.S. and euro zone economies," he said.

September 10-year JGB futures fell 0.15 point to 136.57 2JGBv1, after matching a three-month high of 136.86 in the evening session on Friday. Volume remained thin at around 9,500 lots.

The 10-year JGB yield rose 3 basis points to 1.540 percent, off a three-month low of 1.505 percent JP10YTN=JBTC hit on Friday.

The Ministry of Finance plans to offer 1.9 trillion yen ($17.67 billion) in 10-year JGBs on Tuesday. At current levels, the coupon could be set at 1.5 percent, down from a 1.7 percent coupon for last month's auction of the maturity.

Traders said there was resistance to pushing 10-year yields steadily lower as the yields hovering below 1.5 percent could only be justified by expectations for the Bank of Japan to lower interest rates.

The BOJ is expected to keep interest rates on hold through 2008, putting more focus on downside risks to growth than rising inflation.

The Fed is also expected to keep interest rates steady at 2 percent at its meeting on Tuesday.

U.S. interest rate futures suggested traders do not fully anticipate the Fed will raise the benchmark federal funds target rate, currently at 2 percent, until at least December.