The 10-year yield dipped 2.5 basis points to 0.770 percent, falling for the first time in three days, while 10-year JGB futures rose 21 ticks to 144.13.

"The move today is mostly a correction after JGBs marked a big fall this week on profit-taking," said a fixed-income fund manager at an asset management firm in Tokyo.

"Banks are buying back some of their positions."

The Bank of Japan is expected to announce no new monetary steps when it concludes its two-day meeting later in the day but will stress that it remains ready to act if needed. It might also make an operational adjustment to its asset purchase programme.

Yields on 20-year debt slipped 2.5 basis points to 1.600 percent after moving 6 basis points higher in the two previous sessions, while those on 30-year bonds fell by the same margin to 1.815 percent.

The fund manager also said worries about Japan's political squabbling eased somewhat after Prime Minister Yoshihiko Noda clinched an 11th hour compromise on Wednesday with the opposition, saving a hard-fought deal on a contentious sales tax increase in return for a pledge to hold a general election "soon".

Noda must push through the plan to double Japan's 5 percent sales tax by 2015, to reduce the country's massive public debt and stave off downgrades to Japan's sovereign ratings by credit rating agencies.