TOKYO, Feb 10 (Reuters) - Yields on Japanese government bonds pared gains on Wednesday after an auction drew solid demand, but many traders expect yields to rise in the future on hopes of a global economic recovery.
Earlier on Wednesday, a liquidity auction received bids worth 3.10 times the amount available, higher than a bid-cover ratio of 2.64 at the previous auction.
Long-term yields are trading near the highest in around two years, supported by an improving growth outlook. Expectations that the Bank of Japan will allow bond yields to trade in a wider range are also a supportive factor.
Benchmark 10-year JGB futures barely moved at 151.48, with a trading volume of 21,075 lots.
The 10-year JGB yield rose 0.5 basis point to 0.070%.
The 20-year JGB yield rose 1 basis point to 0.470%.
At the long end of the yield curve, the 30-year JGB yield was flat at 0.670%. The 40-year JGB yield was flat at 0.715%.
The five-year yield was flat at minus 0.100%.
At the short end, the two-year JGB yield rose 0.5 basis point to minus 0.125%.
(Reporting by the Tokyo markets team; Editing by Krishna Chandra Eluri)