JGBs retreat on Nikkei rebound, upbeat data

* JGBs dip on Nikkei bounce, machinery orders spike

* Bargain hunters close in, trim JGB losses

* May machinery orders beat forecasts, rise 10.4% mth/mth

By Shinichi Saoshiro

TOKYO, July 9 (Reuters) - Japanese government bonds fell on Wednesday as Tokyo shares followed Wall Street higher, curbing demand for safe haven debt.

JGBs were also hit by an upbeat economic reading, as May machinery orders jumped 10.4 percent from the previous month, much higher than the median forecast for a 1.1 percent rise.

The bond market fell in a knee-jerk reaction to the data, with September futures dipping as much as half a point, but losses were trimmed swiftly as bargain hunting kicked in.

Market watchers said investors are willing to buy JGBs on dips as not all were able to keep pace with Tuesday's bond rally, when futures surged a full point on soft stocks and good results of a five-year auction.

"Bargain hunting is likely to gradually gain the upper hand, as prospects of an economic slowdown and financial sector concerns are prevailing market themes," said Eiji Dohke, chief fixed-income strategist at UBS Securities.