JGB futures jump as global recession fears persist

* Global recession fears spark futures buybacks

* Volatility in Dec futures high ahead of expiry

* Japan's October current account surplus drops 56.6 pct

TOKYO, Dec 8 - December 10-year Japanese government bond futures jumped on Monday as global recession fears prompted traders to buy back the lead contract after they had trimmed long positions aggressively ahead of a benchmark switch in JGB futures.

December futures dropped in early trade, hurt by a rise in stocks, a fall in U.S. Treasuries late last week and technical selling linked to unwinding of long positions before the futures rollover.

The lead contract soon rebounded sharply as concerns about the deteriorating global economy, as well as worries that December futures might have been oversold given March futures' current level, prompted traders to cover short positions, said Atsushi Ito, JGB strategist at Morgan Stanley.

"Both U.S. and Japanese data have been very poor and JGB futures should rise sharply," said Ito. "The only factor preventing futures from staying above the 140 level is that investors cannot take any more risks as the market turmoil has damaged their portfolios badly."

Government data showed on Monday that Japan's current account surplus shrank by a more-than-expected 56.5 percent in October.

That news came when investors were already worried about the global economy as U.S. data on Friday showed the world's biggest economy had lost more than half a million jobs in November, the most in 34 years.

December futures jumped 0.68 point to 139.81 after hitting the day's high at 140.08.

In early trade, the lead contract fell as low as 138.50, dropping well below March futures, which struck the day's low at 138.90.

"Futures may remain very volatile until Thursday, the last trading day of the current lead contract," said Koji Ochiai, senior market economist at Mizuho Investors Securities.

The benchmark 10-year JGB yield fell 1 basis point to 1.355 percent, hovering near a 7-½ month low of 1.340 percent hit last week.

The five-year yield was down 1.5 basis points at 0.855 percent.

The two-year yield edged down 1.5 basis points to 0.550 percent.

The Nikkei share average was up 2.6 percent by midday, rising above the psychologically important 8,000 level.

U.S. Treasuries fell on Friday as a view that Treasuries were too pricy after a rally that took yields to five-decade lows outweighed a big drop in employment.