TOKYO, Oct 31 (Reuters) - Japanese government bonds rose

on Friday, reversing earlier losses, after strong demand at an

auction of two-year notes ended a run of weak sales for the

tenor.

Investors returned to the debt after Bank of Japan Governor

Kazuo Ueda adopted a relatively dovish stance on Thursday,

following the central bank's decision to again hold off on

raising interest rates.

"It is likely that renewed buying interest emerged in the

two-year sector (after) a hawkish surprise was averted, and

expectations for increases in policy rates over the short- to

medium-term eased," said Shoki Omori, chief desk strategist at

Mizuho Securities.

"Although the two-year sector is currently assessed as rich

on the yield curve, demand remained resilient."

The two-year JGB yield declined 1.5 basis

points (bps) to 0.91% after the auction results were announced.

Earlier in the day, the yield had edged up to 0.93%. Bond yields

move inversely to prices.

A closely watched indicator of demand called the

bid-to-cover ratio, which measures the amount of bids received

against the amount of bonds on offer, rose to 4.35 at the same,

returning to long-term averages after two months of successive

16-year lows.

The so-called tail, measuring the difference between the

average and lowest prices at the sale, contracted to 0.002 yen,

the smallest in more than four years.

The five-year yield was flat at 1.21%,

shedding an earlier 1.5 bps rise.

The 30-year yield fell as much as 1 bp to

3.025%, a three-month low.

Other tenors had not yet traded following the auction

results.

(Reporting by Kevin Buckland; Editing by Subhranshu Sahu)