JGBs narrowly mixed, shrug off trade data

TOKYO, Oct 24 (Reuters) - Japanese government bonds were narrowly mixed on Wednesday as investors awaited consumer inflation data on Friday for clues to when the Bank of Japan will raise interest rates.

The market had little reaction to a greater-than-expected 62.7 percent rise in Japan's September trade surplus from a year earlier to 1.6378 trillion yen ($14.26 billion).

Exports to the United States fell 9.2 percent, reflecting an economic slowdown in the world's biggest economy.

"The market is waiting for Friday's data on consumer prices," said Makoto Yamashita, chief JGB strategist at Lehman Brothers in Tokyo. "There are investors with demand, but they are unlikely to move much ahead of the 20-year JGB auction in the next session."

The Ministry of Finance will sell 800 billion yen of 20-year bonds on Thursday.

December futures were up 0.03 point at 135.95 2JGBv1.

The lead contract hit a one-month high of 136.21 on Monday, boosted by increasing doubts about a BOJ rate rise this year due to turmoil in global financial markets and worries over the spillover of subprime problems to the broader U.S. economy.

The market now sees a roughly 35 percent chance of a BOJ rate hike in December, according to swap contracts on the overnight call rate <JPONIBOJ=TRDT>, down from around 70 percent a week ago. Other contracts pointed to a roughly 50 percent chance of a hike by January, down from around 80 percent early last week.

The benchmark 10-year yield <JP10YTN=JBTC> climbed 0.5 basis point to 1.585 percent. On Monday the yield fell as low as 1.555 percent, its lowest since Sept. 18.