TOKYO, Nov 24 (Reuters) - Japanese government bond futures edged up on Tuesday as some market players covered short positions made late last week and the Nikkei share average fell.

* Expectations for month-end buying put downward pressure on longe-dated yields although some felt the pace of the JGB yield drop could slow after the benchmark 10-year note yield slid below 1.30 percent last week.

* On Friday the Bank of Japan kept interest rates near zero and upgraded its economic assessment, prompting some players to sell futures. But JGBs stayed firm as the government published a report hours after the rate decision pronouncing the economy officially in deflation for the first time since 2006.

* Some market players speculate that the BOJ could soon find itself under pressure to buy more government bonds to strengthen its commitment to a very easy monetary policy, analysts said. But most players remain doubtful of such a development for now.

* 'The market focus on deflation is positive for JGBs for the short term,' said RuiXue Xu, a rates strategist at RBS Securities Japan. 'But it will be negative for JGBs in the long run because it could prompt the government to loosen fiscal discipline.'

* December futures rose 0.17 point to 139.42, near a six-week high of 139.56 touched on Friday.

* The benchmark 10-year yield edged down half a basis point to 1.300 percent staying in sight of 1.290 percent hit last week, the lowest since mid-October.

* Longer-dated bonds were firmer with the 20-year yield down a basis point at 2.025 percent. But the two-year yield edged up half a basis point to 0.245 percent ahead of a sale for the maturity on Tuesday.

(Reporting by Satomi Noguchi; Editing by Michael Watson)

((satomi.noguchi@thomsonreuters.com; +81-3-6441-1875; Reuters Messaging; satomi.noguchi.reuters.com@reuters.net)) Keywords: MARKETS JAPAN JGB

(If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)

COPYRIGHT

Copyright Thomson Reuters 2009. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.