TOKYO, Dec 17 (Reuters) - Japanese government bond prices looked past a U.S. interest rate increase and slightly diminished demand at a 20-year sale and were mostly steady on Thursday, with the superlong zone edging slightly higher.
The benchmark 10-year JGB yield was flat at 0.295 percent, while March 10-year JGB futures hit a record high of 148.93 before ending up 0.05 point at 148.87.
Japan's Ministry of Finance offered 1.2 trillion yen ($9.80 billion) of 20-year JGBs, with a coupon of 1.0 percent, below the current issue's coupon of 1.2 percent. The lowest accepted price at the auction was 99.20 to yield 1.048 percent.
But the bid-to-cover ratio, a gauge of demand, fell slightly to 3.07 from 3.59 at last month's sale. The tail between the average and lowest accepted prices also widened to 0.11, compared with 0.03 last month, suggesting demand was not as strong this month.
Prices in the superlong sector later came off their lows, with the 20-year yield edging down 1 basis point to 1.005 percent, its lowest level since February, and below a session high of 1.015 percent.
The 30-year JGB yield also shed half a basis point to 1.345 percent, down from 1.360 percent earlier in the session.
In a widely anticipated move on Wednesday, the Federal Reserve raised its benchmark interest rates by a quarter of a percentage point on Wednesday, the first step of what it indicated would be a "gradual" tightening cycle.
Bank of Japan policymakers began their own two-day rate review meeting on Thursday, and are widely seen holding off on expanding the bank's massive stimulus programme.
Underpinning demand for safe-haven fixed income assets, Ministry of Finance data released early on Thursday showed that Japanese exports fell 3.3 percent in November from a year earlier, more than the median estimate for a 1.5 percent annual decline in a Reuters poll. That was the biggest decline since a 5.8 percent year-on-year fall in December 2012.
$1 = 122.4000 yen Reporting by Tokyo markets team; Editing by Jacqueline Wong