* Japan's top life insurer says to restrain yen bond buying
* Plans to keep yen bond buying at minimum if yield stays low
* Will buy foreign bonds and stocks
* Not in a phase to sell Japanese stocks
By Hideyuki Sano
TOKYO, April 24 (Reuters) - Nippon Life, Japan's biggest private life insurance company, plans to keep fresh investment in domestic bonds to a minimum and allocate more funds to risk assets such as foreign bonds in the year to March, a senior executive said on Friday.
The insurer is suspending a long-standing policy of allocating about 70 percent of its funds to fixed income yen products because their yields are too low, Kazuo Sato, the firm's general manager of investment planning, told reporters.
The 10-year Japanese government bond yield hovered at 0.285 percent, near a record low of 0.195 percent hit in January, as the Bank of Japan's massive purchases of JGBs from the markets has left limited anounts for other buyers.
"These days we can't buy as much as we want to. Whenever we place slightly bigger orders the market moves. So, we buy only the minimum required for liquidity needs. We will stick with this stance as long as their yields stay low," Sato said.
But he also added that company is unlikely to go so far as to reduce its holding of yen bonds.
Nippon Life, which has total assets of 60.6 trillion yen ($492 billion), plans to buy foreign bonds and stocks instead, hedging some of the currency risk on bonds, Sato said.
The insurer mainly focuses on foreign stocks, but Sato also said the firm could revise up its forecast for Japanese stock market. Currently it expects the Nikkei share average to stand at around 20,000 next March, though it rose above that level earlier this week.
The Nikkei hit a 15-year high this week, supported by factors ranging from hopes of a recovery in Japan's economy, more buying by Japanese public investors, and higher share holder returns.
"We think Japanese companies are recovering their ability to grow. Last financial year we sold 130 billion yen of Japanese shares, but this year we are not in a phase to sell," Sato said.
Nippon Life also said unrealised gains on its securities rose to 11.02 trillion yen at the end of March, the highest level since the company started disclosing the figure in 1989.
The insurer's unrealised gains on domestic shares rose to 4.99 trillion yen from 2.83 trillion yen the year before.
($1 = 119.49 yen) (Editing by Simon Cameron-Moore)