* Benchmark yields flat after rise to this month's high * 20-yr yields flat after rise to highest level since April By Lisa Twaronite TOKYO, Dec 14 Japanese government bonds mostly slipped on Friday, with benchmark yields touching their highest level this month, as investors braced for a weekend election likely to bring the conservative Liberal Democratic Party back to power and set the stage for more fiscal and monetary stimulus. The latest polls indicated the general election on Sunday is likely to result in a decisive victory for the opposition LDP, whose leader, Shinzo Abe, has called for the Bank of Japan to take more drastic steps to lift the economy and pull the country out of deflation. "Bargain hunters emerged in the superlong zone late in the afternoon, but most investors are waiting for the election outcome and next week's BOJ meeting," said a fixed-income fund manager at a Japanese trust bank. Yields on 10-year JGBs were flat at 0.725 percent after earlier rising to 0.730 percent. That marked their highest level since Nov. 27, moving away from last week's 9 1/2 year low of 0.685 percent. Ten-year JGB futures for March ended down 0.10 point at 144.30 point in heavy trading of 43,876 contracts. Futures are down from their record intraday high of 145.26 hit a week ago, although part of the difference is due to the December contract's expiry this week. The Bank of Japan's latest tankan survey, released on Friday, showed business sentiment worsened for a second straight quarter in the three months to December and will barely improve early next year, adding to pressure on the central bank to do more. [ID:nL4N09M2TJ The BOJ will hold its last 2012 policy meeting on Wednesday and Thursday. It will most likely increase its asset-buying and lending programme, currently at 91 trillion yen ($1.1 trillion), by another 5-10 trillion yen, sources have said. "The tankan results weren't good, though the market shrugged them off. But the long end is coming under pressure again, expecting more stimulus after the election," said a fixed-income fund manager at a Japanese asset management firm. Economists predict Japan will exit its mild recession early next year, on expectations that Sunday's election will usher in a new government intent on aggressive monetary easing, a Reuters poll showed on Friday. Yields on 30-year JGBs added half a basis point to 1.945 percent. Those on 20-year bonds were flat at 1.695 percent, after earlier rising to 1.705 percent, their highest since late April. The superlong sector was also pressured by supply concerns, as the Ministry of Finance will sell 1.2 trillion yen of 20-year debt on Dec. 18. The so-called "Abe trade" in recent weeks has led to a weaker yen. It has also pressured prices of longer-dated JGBs on inflation fears and led the yield curve to steepen. On Friday, Japan's Ministry of Finance was slated to meet with primary dealers in the JGB market to discuss issuance, although the election will delay Japan's normal budget schedule. Issuance plans are usually decided for both the current fiscal year's supplementary budget and the next fiscal year's initial budget and announced to the market in late December.