JGB 10-yr yield hits 4-mth low on economy concerns

*10-year yield touches 4-month low of 1.455 percent

*Economy concerns overshadow Nikkei rally, weaker Treasuries

By Shinichi Saoshiro

TOKYO, Aug 11 (Reuters) - Japanese government bonds advanced on Monday, with the benchmark 10-year yield falling to a fresh four-month low as persistent concerns about the domestic and overseas economies overshadowed solid gains in Tokyo shares.

JGBs rallied broadly on Friday on economic concerns, and cash yields from two- to 30-years dropped to four-months lows.

On Monday the bond market picked up from where it left off, and though the Nikkei's 1.7 percent spike .N225 and Friday's retreat by Treasuries slowed the pace of the advance, they were not enough to prevent market participants from pushing bond yields down further.

"Worsening economic prospects, especially for the domestic economy, are persistently strong," said Atsushi Ito, a fixed-income strategist at Morgan Stanley.

"That is obvious from the absence of profit-taking when the 10-year yield declined below 1.5 percent. Some investors are likely taking advantage of the holiday-thinned market to shop while they can," said Ito.

The 10-year yield edged down 0.5 basis point to 1.465 percent JP10YTN=JBTC after touching a new four-month low of 1.455 percent.

September 10-year futures 2JGBv1 slipped 0.01 point to 137.67. Futures momentarily edged up to 137.87 as the 10-year bonds gained, but market participants said offers placed on the back of the Nikkei's surge dragged them back into the red.

The five-year yield climbed 0.5 basis point to 1.015 percent JP5YTN=JBTC. (Editing by Michael Watson)