JGBs edge up on Treasuries, faltering Nikkei

* JGBs gain on surge in U.S. Treasuries overnight

* Faltering Tokyo shares also lift bonds

* Duration extensions eyed to support longer-end JGBs

By Shinichi Saoshiro

TOKYO, Nov 26  - Japanese government bonds rose on Wednesday, boosted by strong gains in U.S. Treasuries the previous day and a fall in Tokyo shares.

Longer-dated Treasuries surged on Tuesday on weak economic data and expectations that a Federal Reserve plan to buy housing-related securities with a $600 billion programme would sustain investor demand for government debt.

Month-end buying by investors who follow certain indexes and extend the durations of bonds in their portfolios also supported JGBs, market watchers said.

"The view is strong that the yield curve's bull-flattening trend will remain intact for a while on index duration extensions," Chotaro Morita, head of Japan fixed-income strategy at Barclays Capital, said in a research note.

The five-year JGB yield slipped 1.5 basis points to 0.860 percent, while the benchmark 10-year yield dropped 2 basis points to 1.385 percent.

The December 10-year JGB futures climbed 0.37 point to 139.41 after hitting a high of 139.57.

Analysts said the short-end was slightly top-heavy ahead of a 1.8 trillion yen ($18.91 billion) two-year auction on Thursday.

The market's focus is on how strong investor demand will be for the new two-year JGBs, after the Bank of Japan left interest rates unchanged last week and comments from Governor Masaaki Shirakawa suggested the BOJ was in no hurry to cut rates further from the current 0.3 percent.

Tokyo's Nikkei stock average declined 0.8 percent on Wednesday, with a fall in high-tech shares offsetting the lift from a rise on Wall Street the previous day.