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TOKYO, Jan 8 (Reuters) - Yields on benchmark 10-year Japanese government bonds eased slightly on Tuesday ahead of an auction of 2.3 trillion yen ($26 billion) worth of similar maturities later in the day, as market participants expected it to go well.
* Yuya Yamashita, rates strategist at J.P. Morgan in Tokyo, said the 10-year yield in the secondary market was at a more attractive level, which hit a 4-1/2-month high of 0.840 percent on Monday, while concerns over the U.S. fiscal situation would be supportive.
* "The U.S. fiscal cliff issue has been avoided but it has not been resolved yet because some of the automatic spending cut measures have been deferred," he said, adding that Congress still needed to raise its $6.4 trillion debt ceiling by early March to avoid a first-ever default, which many said would upend global financial markets.
* Yamashita also said expectations that the Bank of Japan would conduct further monetary easing measures under the new government led by Prime Minister Shinzo Abe would support the below 10-year sectors.
* The 10-year yield inched down 0.5 basis point to 0.830 percent, while 10-year JGB futures added 2 ticks to 143.46.
* Yields on longer-dated 30-year debt were unchanged at 2.005 percent after touching 2.010 percent, their highest level since early September, 2011, while those on the 20-year bonds were also unchanged, at 1.795 percent.
* Kyodo news reported late on Monday that the Japanese government is likely to sell more than 5 trillion yen in new bonds to fund an economic stimulus package that could be agreed as early as this week.
* "The impact is bearish (on JGBs) but below 10-year sectors will have relatively small impact for the issuance increase," Yamashita said, because of expectations of more BOJ purchase of shorter-dated bonds.