* 5-yr JGB auction draws solid demand, offsets fiscal worries

* 10-yr yield down 10.5 bps from 5-mth high hit this week

By Shinichi Saoshiro

TOKYO, Nov 11 (Reuters) - Japanese government bonds rallied on Thursday, with 10-year futures jumping to a three-week high, as the market took heart in the solid results of a five-year debt sale after a string of poorly received auctions.

The 2.4 trillion yen ($27 billion) five-year auction helped allay concerns over Japan's fiscal situation that had sent the benchmark 10-year yield to a five-month high earlier in the week.

The auction's bid-to-cover ratio, a gauge of demand, rose to 3.7 from 2.17 at the previous auction in October and was the highest since the September tender. The tail, the difference between the lowest and average prices and used as another gauge of an auction's success, tightened to 0.02 from 0.04. TENDER01

"Recent JGB selling had gone a little too far," said Nobuto Yamazaki, a fund manager at DIAM Asset Management.

"Investors are still worried about what next year's budget will look like, but if the government can pull it together and keep bond issuance somewhat under control, then the market will settle down and yields could pull back even further."

December 10-year futures jumped 0.48 point to 138.34, having hit a three-week high of 138.38. They touched a three-month low of 137.29 on Monday.