JGB futures rise as stocks slip, Treasuries gain

* US Treasuries climb after weak data, Nikkei falls 0.8 pct

* Solid 30-year auction on Tues eases JGB supply concerns

TOKYO, April 15 (Reuters) - Japanese government bond futures rose on Wednesday as investors took their cues from a fall in stocks and gains in U.S. Treasuries, after a sharp pullback in U.S. retail sales dented hopes that the global recession is abating.

A surprisingly solid auction of 30-year JGBs the previous day underpinned the market as it helped ease concern about a jump in government debt issuance.

Tuesday's debt sale was seen as a key test of investor demand after the government said last week it would issue more than 10 trillion yen ($100 billion) of debt in the year to March 2010 to finance its latest stimulus package, its largest ever at about 15.4 trillion yen.

"Optimism about the economy has begun to wane and stocks have peaked, benefiting government bonds," said Koji Ochiai, senior market economist at Mizuho Investors Securities. "Investors are now reacting more to negative factors such as the U.S. retail sales data than to positive ones."

June futures gained 0.24 point to 136.80 2JGBv1, moving away from a 5-1/2-month low of 136.43 hit last week on worries about the surge in debt issuance.

The benchmark 10-year yield slid 2.5 basis points to 1.435 percent JP10YTN=JBTC, having fallen from a five-month high of 1.490 percent hit on Friday.

"Traders and investors who had sold or held back before the 30-year auction are buying JGBs today, thinking supply fears may not push up bond yields much further," said a bond trader at a European brokerage.

Once the market realises the bond slump that boosted the benchmark 10-year yield from a 5-year low of 1.155 percent struck late December has run its course, investors will have little choice but to pick up JGBs, the trader said.

Japanese institutional investors, cash rich at the start of the new financial year, are looking to buy JGBs as the economy wallows in its deepest recession since World War Two.

Yields on two- and five-year notes slid 2 basis points each to 0.425 percent JP2YTN=JBTC and 0.840 percent JP5YTN=JBTC, respectively.

The 20-year yield was down 1.5 basis points at 2.115 percent JP20YTN=JBTC.

Tokyo's Nikkei share average .N225 declined 0.8 percent by midday, weighed down by exporters on a firmer yen. [.T]

U.S. Treasuries climbed on Tuesday as a surprise fall in retail sales offered a stark remainder of the economy's weakness, prompting investors to seek safety in government debt. [US/]

As the 30-year JGB auction has passed, the market's focal point has shifted back to the Ministry of Finance's meeting with JGB primary dealers on Friday.

Some players think the meeting is part of government preparations for deciding how the new debt issuance will be allocated in terms of maturities. (Editing by Hugh Lawson)