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JGBs edge lower, caution before 10-yr auction result
*JGBs weighed by position adjustments for 10-year auction
*U.S. jobless data, ECB meeting also cap bonds
*Losses limited by bearish stocks, Nikkei down 0.2%
By Shinichi Saoshiro
TOKYO, July 3 (Reuters) - Japanese government bonds edged lower on Thursday as caution prevailed before the results of a key auction and potential market-moving events later in the day.
Bond dealers braced for a 1.9 trillion yen ($17.95 billion) auction of 10-year paper, with results due at 0345 GMT.
U.S. non-farm payrolls data, due at 1230 GMT, and a meeting of the European Central Bank slated for Thursday also kept participants wary.
Market watchers said hedge selling ahead of the 10-year tender was nudging yields higher.
"The auction is expected to be a dealer-led affair as investors are likely to weigh the outcome of the U.S. jobless data and the ECB meeting first," said Tatsuo Ichikawa, fixed-income strategist at ABN AMRO Securities.
As expected, the coupon on the 10-year JGB was set at 1.7 percent based on recent yield levels, compared with a 1.8 percent coupon in the previous month's auction.
The retreat in JGBs was limited as the continued slide by Tokyo shares shored up sentiment. The Nikkei .N225, after marking the longest losing streak in 43 years the previous day, fell a further 0.2 percent on Thursday.
September 10-year futures 2JGBv1 slipped 0.01 point to 134.67 after rising earlier to 134.87 in response to Wednesday's gains in U.S. Treasuries.
The benchmark 10-year yield JP10YTN=JBTC rose 1.5 basis points to 1.670 percent.
($1=105.83 yen)
(Editing by Brent Kininmont)
