TOKYO, March 18 (Reuters) - Japanese government bond prices rose on Wednesday after an auction of 20-year JGBs attracted decent bids and U.S. bond prices extended gains on falling oil prices and soft U.S. economic data.

The auction of 1.2 trillion yen ($9.9 billion) of 20-year JGBs produced a lowest accepted price of 99.80, in line with market expectations of 99.65-99.95.

The results were good enough to prompt short-covering in the futures as many market players had been cautious after many disappointing JGB auctions since January.

The bid-to-cover ratio was 3.42, slightly below the previous auction but near its average in recent months.

The 10-year JGB futures extended the day's gains to 0.40 point to trade at 147.49.

The market was also helped by firmness in U.S. bonds on Tuesday.

The 10-year U.S. debt yield fell to two-week low of 2.038 percent, as oil prices plunged on rise in inventory and U.S. housing starts plunged to one-year low.

The 10-year JGB yield dropped to 0.370 percent , edging near last week's low of 0.355 percent.

The 20-year yield fell to 1.140 percent, its lowest level in almost three weeks. ($1 = 121.32 yen) (Reporting by Tokyo Markets Team; Editing by Richard Borsuk)