(Updates prices, adds analyst comment in paragraphs 10 and 11)

By Rocky Swift

TOKYO, May 23 (Reuters) - Japanese government bonds

recovered slightly on Friday, after a volatile week that saw

fiscal and inflation concerns drive super-long yields to record

highs.

Yields on 20-, 30-, and 40-year JGBs have been climbing,

fuelled by worry over the country's worsening fiscal health, as

some political parties advocate consumption tax cuts to counter

rising prices.

Yields move inversely to bond prices.

Data on Friday showed Japan's core consumer inflation hit

3.5% in April, its fastest annual pace in more than two years,

keeping pressure on the Bank of Japan to continue raising

interest rates.

A weak auction of 20-year bonds on Tuesday underscored the

market's diminishing capacity to absorb new debt needed to

finance the government's fiscal deficit.

BOJ Governor Kazuo Ueda said on Thursday that the central

bank will closely monitor market developments after the surge in

yields on super-long debt.

"The risk of JGBs becoming 'indigestible' in the ultra-long

term zone remains," Mizuho analysts said in a research note on

Friday. "The incentive to reduce issuance of super-long bonds

(thereby shortening the duration) is relatively strong."

The 30-year JGB yield fell 5 basis points to

3.115%, retreating from the all-time high of 3.185% hit on

Wednesday. The 40-year JGB yield slid 7 basis

points to 3.6%, down from the record 3.675% touched on Thursday.

The benchmark 10-year yield fell 1.5 basis

point to 1.545%. Two and five year yields also declined.

The recovery in JGBs on Friday followed a similar rally in

U.S. Treasuries, but concerns about demand for long-dated debt

remain, said Resona Holdings chief strategist Shinsuke Kajita.

"We can't rest easy yet as auctions for 40-year bonds and

other securities are scheduled for next week in Japan," he said.