JGBs climb as Nikkei takes a hit

* JGBs catch an updraft on sliding stocks, firmer Treasuries

* Nikkei falls on strong yen, high oil, Wall Street plunge

* Higher-than-expected inflation data brushed aside

TOKYO, June 27 (Reuters) - Japanese government bonds climbed on Friday as domestic shares, already on a shaky footing, fell over 2 percent on a stronger yen, record oil prices and a plunge in Wall Street.

The drop in the Nikkei stock average overshadowed a slew of domestic data released on Friday, which showed a rise in inflation to a decade high and a rebound in industrial production.

"The bond market remains strong, with gains fueled by declining Treasury yields and bearish stocks," said Hidenori Suezawa, chief fixed-income strategist at Daiwa Securities SMBC.

Japan's May nationwide core CPI, which excludes fresh food prices, rose 1.5 percent from a year earlier, slightly above a median forecast of 1.4 percent. It was the biggest annual inflation rise since March 1998. [JPCPI=ECI]

Also released on Friday, Japan's industrial ouput showed a 2.9 percent rise in May from a month earlier, above the median market forecast of 2.7 percent. [ECONJP]

"Under normal circumstances, a higher-than-expected CPI reading could reinforce concerns about monetary tightening. But the JGB market is already looking ahead to an economic downturn," said Kazuhiko Sano, chief fixed-income strategist at Nikko Citigroup.

September 10-year futures 2JGBv1 rose 0.57 point to 135.43.

The benchmark 10-year yield JP10YTN=JBTC dropped 4.5 basis points to 1.600 percent, a fresh one-month low.

The five-year yield JP5YTN=JBTC fell 4.5 basis points to 1.165 percent. (Reporting by Shinichi Saoshiro; Editing by Brent Kininmont)