* 10-yr auction smooth * Bid-to-cover ratio drops from previous sale * 10-yr futures rise but short of 20-day moving average * Govt Pension Investment Fund to review allocation model TOKYO, Feb 5 (Reuters) - Japanese government bonds rose on Tuesday, with the benchmark yield backing off a three-week high hit in the previous session amid fears about the impact of political woes in Italy and Spain. Disappointing U.S. factory orders data, a downward revision to a report on U.S. business investment plans and a smooth sale of 10-year JGBs also bolstered the market. The Ministry of Finance's offering of 2.4 trillion yen ($26 billion) of 10-year notes garnered a lowest accepted price of 100.04. The sale reopened the current issue with a coupon of 0.8 percent. The auction's tail - the gap between the lowest and average prices - was 0.02, matching that of the previous sale, although the sale drew bids of only 2.75 times the amount offered, down from the previous sale's bid-to-cover ratio of 3.52 times. "The sale was decent, though not spectacular, and there was some follow-through buying in the cash market in the afternoon," said a fixed-income fund manager at a Japanese trust bank. The 10-year JGB yield slipped 1 basis point to 0.795 percent. The 10-year JGB futures contract ended up 0.22 point at 143.90, though it still remained shy of its 20-day moving average, now at 144.09. Most market participants had expected that the 10-year sale would go smoothly, after the benchmark yield moved away from a six-week low of 0.720 percent hit on Jan. 25 to 0.805 percent on Monday, its highest level since Jan. 15. But some investors were concerned about the slightly larger offering size. The ministry increased the monthly offering amount by 100 billion yen this month, and will do the same next month, to fund its supplementary budget. "We started recommending receiving the 10-year tenor in swaps," said Maki Shimizu, senior strategist at Citigroup Global Markets Japan. Spanish and Italian bond yields rose after a corruption scandal prompted calls for Spanish Prime Minister Mariano Rajoy to resign and on news of a probe of alleged misconduct involving an Italian bank three weeks before national elections. That hit risk appetite, helping to lift U.S. Treasuries and sending the Nikkei stock average skidding 1.9 percent off Monday's 33-month closing high. The 20-year bond yield shed half a basis point to 1.790 percent, while the 30-year bond yield lost 1 basis point to 1.995 percent. The chairman of Japan's Government Pension Investment Fund told Reuters in an interview on Monday that the fund would review its portfolio allocation model around April, as yields on 10-year JGBs were languishing at around 0.8 percent. The GPIF is the world's biggest public pension fund, with its assets of $1.2 trillion mostly held in JGBs.