TOKYO, Nov 11 (Reuters) - Japanese government bonds gained on Wednesday and the yield curve bull-flattened as investors hunted for bargains a day after the government's show of concern over rising long-term rates improved sentiment.

* The recent sharp rise in the cost of insuring against default in government debt came to a halt on Tuesday. Five-year credit default swaps JPGV5YJPAC=MP on Japan's sovereign debt were around 75 basis points on Tuesday, unchanged from Monday. That compared with around 66 bps on Friday and 45 bps three weeks ago. The spread was near its highest level since April, though still below a record of 130 touched in February.

* The two-year/10-year yield spread tightened to 117.5 basis points from a 3-½ year high of 121 basis points on Tuesday.

* Tuesday's well-received U.S. 10-year note auction helped kick-start an early JGB rise.

* Market players said the JGB yield curve flattened as domestic investors including life insurers and pension funds emerged to buy super-long JGBs after 20- and 30-year yields spiked this week to multimonth highs.

* The outcome of the Bank of Japan's operation to buy a total of 350 billion yen ($3.9 billion) of JGBs outright from the market also buoyed bonds. The BOJ was not flooded with offers to sell JGBs, suggesting bond dealers were not in a rush to dump their inventories. [ID:nBOJJA002B] [ID:nBOJJA002A]

* "The market was due for a rebound as bond prices had reached investor bargain-hunting levels. But investors are not ready to breathe a huge sigh of relief until they see the five-year auction's outcome," said Takafumi Yamawaki, a senior rates strategist at BNP Paribas Securities.

* The market will face a 2.4 trillion yen ($27 billion) five-year debt auction on Wednesday. The auction is seen as a key test of investor demand as fiscal concerns have rattled the bond market over the past month.

* The benchmark 10-year JGB yield hit a five-month high on Tuesday as investors have been bracing for issuance increases by the government to offset low demand for retail bonds, fund an expected tax revenue shortfall and help finance the country's spending plans for the next fiscal year.