TOKYO, Sept 19 (Reuters) - Japanese government bond prices rose on Thursday, extending gains after the Bank of Japan kept its policy on hold, a decision that put the central bank out of step with the U.S. Federal Reserve and the European Central Bank.
While the BOJ's decision was widely in line with market expectations, some market players had thought the central bank could follow in the footsteps of the U.S. Fed and the ECB in easing policy to avoid triggering the yen.
The BOJ's decision lifted the yen and prompted local shares to trim some of their earlier gains, supporting safe-haven JGBs.
Yields on longer-dated bonds fell sharply as some traders had speculated the BOJ could announce measures to help the yield curve steepen should it cut short-term interest rates further into negative.
The 30-year JGB yield fell 4 basis points to 0.290%, off 1-1/2-month high of 0.350% touched earlier in the day.
The 20-year JGB yield fell 3.5 basis points to 0.155%, off Wednesday's high of 0.220%, its highest since early August.
The 10-year JGB yield fell 3.5 basis points to minus 0.220%, while the price of benchmark 10-year JGB futures rose 0.36 point to 154.67.
At the shorter end of the curve, the two-year JGB yield fell 2 basis points to minus 0.290%, while the five-year yield fell 3 basis points to minus 0.325%.
The market was also lifted by the U.S. Fed's decision to cut interest rates for the second time this year to help sustain a record-long economic expansion. (Reporting by Tokyo Markets Team, Editing by Sherry Jacob-Phillips)