JGBs edge down ahead of five-year auction

* JGBs inch down ahead of five-year auction on Tuesday

* Bonds top heavy after recent yield decline

* Incentives thin after U.S. markets closed on Friday

* Nikkei's losing run provides downside support

By Shinichi Saoshiro

TOKYO, July 7 (Reuters) - Japanese government bonds edged down on Monday, giving up earlier gains ahead of a 1.9 trillion yen ($17.79 billion) auction of five-year debt the next day.

But activity was quiet and volume was minimal, as the market lacked incentives after U.S. markets were closed on Friday for the Independence day holiday.

"JGBs are increasingly becoming top heavy following the recent decline in yields," said Hidenori Suezawa, chief fixed-income strategist at Daiwa Securities SMBC.

The benchmark 10-year yield peaked at 1.680 percent on Thursday on jitters ahead of a 10-year JGB tender, ECB meeting and U.S. employment data.

But it fell and touched 1.615 percent a day later after the closely watched events failed to produce any jarring surprises. The JGB market was particularly relieved as the ECB, after hiking rates as expected, did not signal further tightening ahead.

September 10-year futures 2JGBv1 fell 0.03 point to 135.15, after touching a high of 135.34. The benchmark 10-year yield JP10YTN=JBTC rose 0.5 basis points to 1.645 percent after falling to 1.635 percent.

In range bound trading, bonds still received ample downside support. "JGBs are propped up as the Nikkei looks to be headed for a 13-day losing streak," said Suezawa at Daiwa Securities SMBC.

The Nikkei stock average .N225 slipped 0.2 percent and is on course for its worst losing streak in over half a century. ($1=106.79 yen)

(Editing by Brent Kininmont)