JGBs little changed, MOF meeting with dealers eyed

* Investors nervous about uncertainty over extra JGB issuance

* MOF's meeting with primary dealers on Friday in focus

By Rika Otsuka

TOKYO, April 13 (Reuters) - Japanese government bonds were little changed on Monday in subdued trading as uncertainty over the outlook for extra JGB issuance kept investors on the sidelines.

The government said on Friday it would issue more than 10 trillion yen ($100 billion) of debt in the year to March 2010 to finance its latest stimulus package, which is worth $154 billion. [ID:nT12543]

Market players are keen to see how the government allocates the new debt issuance in terms of maturities.

The Ministry of Finance will hold a meeting with JGB primary dealers on Friday, and some market players see this as part of the government's preparations for deciding on these allocations.

"There are investors wanting to buy JGBs with a chunk of money in their hands," said Mari Iwashita, chief market economist at Daiwa Securities SMBC. "But investors prefer not to move now, knowing they could pick up bonds cheaper later."

June futures edged down 0.03 point to 136.65 2JGBv1. The lead contract hit a 5-1/2-month low of 136.43 last week as worries about a jump in debt issuance to finance new stimulus steps prompted investors to dump JGBs.

The five-year yield dipped 1 basis point to 0.855 percent JP5YTN=JBTC.

Benchmark 10-year bonds had yet to trade by the midday break. The 10-year yield struck a five-month high of 1.490 percent JP10YTN=JBTC on Friday.

Investors were also reluctant to trade as many world financial markets remained shut for the Easter holidays on Monday.

U.S. banks including Goldman Sachs (GS.N), JPMorgan (JPM.N) and Citigroup (C.N) are set to report first-quarter results this week. Bond traders will watch how stock markets react to these earnings reports.

A slide in share prices on any negative surprise from U.S. bank earnings could ignite a sharp JGB rally, a senior bond trader at a European brokerage said.

"JGB futures have started to look cheap as a result of the heavy sell-off sparked by supply concerns," the trader said. "They look ready for a rebound. A fall in stocks, the MOF's meeting with dealers or buy signals on technical charts could trigger active debt buying soon." (Reporting by Rika Otsuka; Editing by Chris Gallagher)