December 10-year JGB futures were up 0.08 point at 142.88, but off a two-month peak of 143.01 hit on Thursday. Japan's Ministry of Finance set a 0.3 percent coupon on the 2.4 trillion yen ($31 billion) of five-year JGBs it offered on Tuesday, down from 0.4 percent at the previous sale in October and the lowest since August. The MOF will release the auction results at 12:45 p.m. Some players may hold off from bidding actively due to expectations that the government will increase bond sales next year, but the five-year sector looks attractive on the yield curve, analysts said. Market participants expect no changes in policy at the Bank of Japan's two-day meeting ending on Wednesday as it decided in October to loosen policy by expanding asset purchases. This loosening stance should underpin demand for the new bonds amid persistent strength in the yen. "The appointment of new heads for Italy and Greece is definitely positive, but it will take time for the crisis to be fully resolved and safe-haven demand is likely to persist," said a fund manager at a Japanese asset management firm. "People think the five-year JGB yield has limited room to fall from current levels, but many don't see it rising to 0.4 percent either given that the gloomy outlook for the global economy will limit yield rises." In cash bonds, the 10-year JGB yield was flat at 0.970 percent. It marked a one-year low of 0.960 percent on Thursday. The No.99 five-year yield edged down 0.5 basis point to 0.340 percent. Relief about the appointments of new leaders in Italy and Greece has quickly been overtaken by worries about Italian bond yields near record highs, denting investor appetite on risk assets such as stocks and supporting demand for safe-haven JGBs. Italy successfully sold 3 billion euros of five-year bonds on Monday, though the auction was priced with yields of 6.29 percent, hitting a euro-era high. Yields stayed elevated, fuelling worries the high costs would disable the country's efforts to slash debt. The Nikkei share average dipped 0.4 percent on Tuesday.