TOKYO, July 10 (Reuters) - Long-term Japanese government

bonds (JGBs) rallied on Thursday as solid demand at a debt

auction counterbalanced concerns over fiscal deficits and an

upcoming election.

Prices for 20- and 30-year JGBs sank earlier this week,

driving yields sharply higher, on concerns that the government's

ruling coalition may lose its majority in the upper house

election on July 20.

The potential defeat could give power to opposition parties

who have pledged in their campaign platforms to cut or abolish

the sales tax.

The Ministry of Finance's sale of 20-year securities had a

bid-to-cover ratio of 3.15, the highest since the March auction

and compared with 3.11 in June, indicating higher demand. The

auction tail of 0.18 yen was shortest since January, also

indicating strong uptake by buyers.

The Ministry of Finance this month trimmed issuance of those

bonds in response to record-high yields on those bonds seen in

May.

The 20-year JGB yield fell 2.5 basis points

(bps) to 2.485%. The 30-year yield fell 4.5 bps

to 3.010%.

The benchmark 10-year yield edged down 1 bp

to 1.49%.