TOKYO, July 13 (Reuters) - Japanese government bond (JGB)

yields extended declines on Monday amid hopes of a potential

shift in the investment strategy of the world's largest pension

fund, Government Pension Investment Fund (GPIF).

Here are a few details:

* The 10-year JGB yield fell as much as 2.5

basis points (bps) to 2.735%. The 20-year JGB yield

fell 4 bps to 3.710%. Yields move inversely to

bond prices.

* Japanese government bond prices rose sharply on Friday

after Finance Minister Satsuki Katayama said that the government

would explore measures to encourage pension funds, including the

GPIF, to increase investments in domestic financial assets.

* "The yields fell sharply on Friday but it was because

investors bought bonds to cover short positions; it was not

aimed at increasing long positions," said Yuki Kimura, a bond

strategist at Okasan Securities.

* The market is still weighing uncertainties about the

nation's spending and concerns about the Bank of Japan falling

behind the curve in coping with inflation, she said.

* The finance ministry will hold a 20-year bond auction in

the next session, which will be followed by a 40-year bond

auction on July 22.

* The five-year yield fell as much as 1 bp to

1.970%.