TOKYO, March 27 (Reuters) - Japanese government bonds

(JGB) traded in a narrow range again on Wednesday, with yields

ticking lower as investors digested comments from a BOJ official

and favourable results at a sale of 40-year bonds.

The 10-year JGB yield fell 0.5 basis point

(bp) to 0.730%.

The largest declines in yields, which move inversely to bond

prices, were seen on the superlong end after an auction for

40-year bonds saw solid demand.

The bid-to-cover ratio - a measure of demand at auctions -

was 2.49, the highest since September. A larger number signals

higher demand.

The 40-year JGB yield declined 1.5 bps to

2.065%.

The 20-year JGB yield and 30-year JGB yield

both ticked down 1 bp to one-week lows, sitting

at 1.495% and 1.800%, respectively.

In other events, BOJ board member Naoki Tamura spoke on

Wednesday, saying the central bank must proceed slowly but

steadily toward normalising its monetary policy. Although the

market had been on alert for hawkish comments, Tamura made no

mention of future interest rate hikes.

With the Bank of Japan's exit from negative interest rates

out of the way, investors are seeking more clues on when it

could raise rates again and by how much.

Some clarity on future rate hikes could come when the BOJ

releases its the quarterly economic projections at its April

policy meeting, said Ryutaro Kimura, a fixed income strategist

at AXA Investment Managers.

The results of the bank's second policy review workshop in

May and additional wage negotiation news will also garner

attention.

The market has remained relatively subdued in the wake of

the BOJ's monetary policy meeting last week.

Recent bond market moves may be affected by seasonal flows

as Japan's fiscal year comes to an end, said Kimura.

"It may take some more time to properly assess the impact of

negative interest rate policy removal."

On the short end, the five-year yield fell 1

basis point to 0.365%.

The two-year JGB yield remain untraded as of

0515 GMT.