Yen tumbles, JGB yields retreat as BOJ stays vague on hike timing

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BOJ governor says time needed to gauge wage, U.S. economy outlooks

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Yen sinks to five-month low as traders doubt January hike

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Ueda news conference came after stock markets had closed with moderate losses

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By Kevin Buckland

TOKYO, Dec 19 (Reuters) - The yen plunged to its weakest against the dollar in almost five months on Thursday and Japanese government bond yields flipped to declines after Bank of Japan Governor Kazuo Ueda was non-commital on the timing of the next interest rate hike.

The yen sank as much as 1.3% to reach 156.78 per dollar for the first time since July 23, with Ueda saying it will require "considerable time" to gauge the trend in wage increases and that "considerable uncertainty" remains around the outlook for the U.S. economy and the policies of the incoming Donald Trump administration.

"The market's expectation seems to be that a rate hike at the January meeting is unlikely, as it would not coincide with the spring wage negotiations," said Shoki Omori, chief Japan desk strategist at Mizuho Securities.

"The Bank of Japan seems to consider that a January rate hike is not off the table, but the market may not share this view," he said. "This is particularly because the market is aware of the Bank of Japan's cautious stance on the overseas economy."

Benchmark five-year JGB yields were down 1 basis point at 0.705% as of 0746 GMT following Ueda's comments, after earlier being up 4.5 bps at 0.76% for the first time since mid-2009.

Other maturities had yet to trade following the news conference, which began just as Japanese equity markets closed.

The Nikkei finished the day down 0.69% at 38,813.58, paring early losses after the BOJ left policy settings unchanged, even though the outcome was widely expected.

"The BOJ likely decided to give it a miss, judging that it would be fine to wait and confirm the trends for another month," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.

"But in any case, the conditions for another hike are being met: Japan's inflation is on a slight upward trend and import prices are again beginning to rise a bit."

Japanese yields began Thursday's session by tracking a sharp overnight rise in U.S. yields the U.S. Federal Reserve signalled a slower pace of easing next year.

A sell-off on Wall Street also weighed on Japanese equities.

Japan's rate-sensitive real estate sector was the worst performer on the Nikkei, while financials was the only sector to rise.

(Reporting by Kevin Buckland; Editing by Tomasz Janowski)