TOKYO, Jan 21 (Reuters) - Japanese government bond futures rose as stocks slumped on Monday while bargain-hunting lifted the 20-year zone, but cash trading was extremely thin as investors awaited Tuesday's outcome of the Bank of Japan's meeting which is expected to yield aggressive policy easing. * Sources told Reuters that Japan's government and the BOJ have agreed to set 2 percent inflation as a new target, and the central bank will also consider making an open-ended commitment to buy assets until the target is in sight. The central bank will also discuss scrapping the interest it pays on banks' reserves, according to the sources, a move that would push money market rates to zero. Positioning for the possibility of such a move has pushed down yields of shorter maturities, with the 2-year JGB yield losing half a basis point to 0.070 percent on Friday, its lowest since July 2005. * "Everybody's waiting for the BOJ's decision tomorrow," said Naomi Muguruma, a senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities. * Also on Tuesday, the Ministry of Finance will hold some of its regular periodic meetings with primary JGB dealers. "I think the main topic should be fiscal year '13 budget formation and JGB issuance schedule," said Muguruma. "The timing is not related to the BOJ meeting, it's that the government at the end of last week is mostly done with fiscal year '13 budget blueprint." * The 10-year JGB futures contract ended morning trade up 0.15 point at 144.40, moving toward Thursday's intraday high of 144.50, which was its highest since Dec. 13. Japan's Nikkei share average slipped more than 1 percent on Monday, after marking its biggest one-day gain in nearly two years on Friday to a 32-month high. * In the superlong tenor, 20-year bonds also rose, their yield shedding 2 basis points to 1.745 percent, with pension funds said to be buying. * Other maturities were untraded. In addition to wariness ahead of the BOJ outcome, the scheduled closure of U.S. Treasuries trading on Monday also keep debt trading subdued. U.S. financial markets will close on Monday in observance of Martin Luther King Jr. Day. * A weekly gauge of sentiment in the Japanese government bond market slightly deteriorated in the latest week but remained supported by expectations of more BOJ easing steps, the latest Reuters poll showed on Monday. The median forecast for the benchmark 10-year JGB yield at the end of this week came in at 0.770 percent, 2 basis points above Friday's closing level of 0.750 percent .