TOKYO, June 10 (Reuters) - The yield on 10-year Japanese government bonds fell on Thursday to its lowest in nearly five months, following a retreat in U.S. Treasury yields, while strong response to a domestic liquidity auction lifted investor sentiment. The liquidity auction held by Japan’s finance ministry received bids worth 4.42 times, higher than a bid-cover-ratio of 4.28 at the previous auction. The 10-year JGB yield fell two basis points to 0.045%, the lowest since Jan. 29. The 20-year JGB yield fell one basis point to 0.420%. U.S. Treasury yields fell overnight for a second day as traders positioned for inflation data due on Thursday and showed strong demand at an auction. * The 30-year JGB yield fell one basis point to 0.655%. * The two-year JGB yield was flat at minus 0.125%. * The five-year yield fell one basis point to minus 0.115%. * The 40-year JGB yield fell 0.5 basis point to 0.705%. * Benchmark 10-year JGB futures rose 0.18 point to 151.89, with trading volume of 48,775 lots. Reporting by Tokyo markets team, Editing by Sherry Jacob-Phillips