TOKYO, Sept 17 (Reuters) - Japanese government bonds

(JGBs) rose slightly on Wednesday, supported by robust demand at

an auction of 20-year debt, even as investors kept a cautious

eye on a crucial U.S. interest rate decision later in the day.

The 10-year JGB ticked up, sending its yield

down 0.5 basis point (bp) to 1.6%, after the finance ministry

published the results of the 20-year bond sale. A gauge of

demand, called the bid-to-cover ratio, jumped to its highest

level since May 2020.

The five-year yield also declined 0.5 bp to

1.15%.

Yields move inversely to prices.

Investors had been watching the auction closely because

a lack of buyers for the longest-dated JGBs meant the 20-year

yield climbed as high as 2.69% at the start of

the month, a level not seen since October 1999.

The 30-year yield had soared to an

unprecedented 3.285% earlier this month.

In addition, markets are concerned about Japan's fiscal

health, with the ruling party choosing a new leader after

fiscally hawkish Prime Minister Shigeru Ishiba stepped down

following a bruising election defeat.

Other cash JGBs were yet to trade after the auction results,

but the benchmark 10-year JGB futures extended earlier

gains to be up 0.12 yen at 136.64 yen as of 0350 GMT.

"These metrics confirm that investor appetite for long-dated

JGBs remains intact despite the prevailing environment of policy

uncertainty," said Shoki Omori, chief desk strategist at Mizuho

Securities.

"The 20-year sector is steadily evolving into a nexus for a

variety of market participants, including domestic banks, life

insurers, and overseas investors."

On the day, the 20-year yield fell 0.5 bp to 2.665% in early

trading, while the 30-year was flat at 3.25%.

The two-year yield was steady at 0.875% at the midday

trading recess.

Japanese yields were already being pulled lower by declines

in U.S. yields overnight, with traders shoring up bets for a

series of rate cuts from the Federal Reserve, ostensibly

beginning with a 25-bp reduction later in the day.

Market-implied odds signal at least two quarter-point cuts

by year-end, and 96 basis points of reductions by end-March.