* Superlong sector rises even ahead of 20-yr sale on Thurs
* 5-yr, 10-yr spread matches narrowest since Dec 2008
TOKYO, March 13 Japanese government bond prices were mostly higher on Wednesday, bolstered by continued expectations of more Bank of Japan asset buying.
The 20-year sector continued to rise, even ahead of an auction of 20-year bonds. It will be the last such sale of the Japanese fiscal year that closes at the end of this month, and some investors are buying ahead of their book closings.
"People who need to buy JGBs ahead of the new fiscal year don't have much time, said Naomi Muguruma, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities.
"Some who needed to secure the 20-year, and I think the 30-year as well, decided to buy today and not wait for tomorrow's auction," she said.
The 10-year yield fell half a basis point to 0.630 percent, moving back towards a near-decade low of 0.585 percent hit last week.
Ten-year JGB futures inched down 0.03 point to 145.11, moving away from a record high of 145.50 hit on Friday.
The Ministry of Finance will offer 1.2 trillion yen of 20-year bonds on Thursday.
While the yields are likely to continue to decline along the entire curve for a few weeks, driven by expectations of the BOJ's JGB purchases, strategists at RBS Securities Japan advised clients in a note to buy asset swaps instead of 20-year cash bonds.
"We expect fewer investors to engage in aggressive position set-up around auction timing amid current unstable market movements and hence do not foresee much post-auction performance," they said.
The 20-year yield slipped 2 basis points to 1.580 percent, moving back towards a nearly 10-year low of 1.450 percent hit last Tuesday.
The 30-year bond yield slipped 2.5 basis points to 1.725 percent, moving back toward a 2-1/2 year low of 1.625 percent hit on March 5.
The five-year yield edged up half a basis point to 0.125 percent, creeping away from a record low of 0.095 percent on March 4. Some investors were said to be locking profits in that zone after its recent push into record territory.
Market participants also cited waning expectations that the BOJ will scrap the interest paid on excess reserves parked at the central bank anytime soon. Speculation that such a move was imminent contributed to the 5-year yields' fall to record lows.
The spread between the 5-year and 10-year yields narrowed to 0.510 percentage point, matching its level on March 4 on a last-traded basis, which was its narrowest since late December 2008.
On Tuesday, Japan's main opposition party decided to back the government's BOJ governor nominee, making it certain Haruhiko Kuroda will take the helm later this month. Kuroda is expected to pursue aggressive monetary easing to meet the bank's 2 percent inflation target.
"It's hard to sell bonds with the BOJ expected to ease further and while investors' risk appetite is waning," said a fixed-income fund manager at a Japanese asset management firm.