JGBs gain on firmer Treasuries, Nikkei slide

* Futures approach 4-mth high as Nikkei slides 2.6 percent

* Eyes on BOJ's economic verdict later in the day

By Shinichi Saoshiro

TOKYO, Aug 19 (Reuters) -Japanese government bonds climbed on Tuesday, boosted by gains in U.S. Treasuries and a retreat by Tokyo shares.

Bonds continued to draw support from worries about the domestic and global economies, which underscored the prevailing view that the Bank of Japan will keep interest rates steady in the coming months.

"The JGB market is supported all around. Supply and demand conditions are good, sentiment is solid and Treasuries gained overnight," said Shinji Nomura, fixed-income strategist at Daiwa Securities SMBC.

Japan's central bank is expected to downgrade its view on the economy and keep interest rates unchanged at 0.5 percent at a policy board meeting expected to end some time between 0300 and 0430 GMT. [BOJ/RES1]

Its the first rate review since GDP numbers showed last week that the Japanese economy suffered its biggest contraction in seven years during the second quarter.

Money market futures JPONIBOJ=TRDT suggest some investors see a chance of a BOJ rate cut by March next year but analysts said this had to be taken with a grain of salt as price moves were exaggerated by a relatively thin market.

September 10-year futures 2JGBv1 rose 0.13 point to 137.97, approaching a four-month high of 138.12 hit last week.

The benchmark 10-year yield JP10YTN=JBTC fell 1 basis point to 1.430 percent.

The Nikkei stock average .N225 declined 2.6 percent to 12,822.48. [.T]