By Theresa Barraclough Oct. 16 (Bloomberg) -- Japan's government notes advanced for a second day after today's sale of 1.9 trillion yen ($19 billion) in five-year debt attracted more bids than the average of the previous two auctions. The Ministry of Finance sale drew bids worth 3.04 times the amount on offer, compared to an average ratio of 2.93 at the August and September sales. Demand for debt increased as concerns of a global recession weighed on stocks, causing the Nikkei 225 Stock Average to drop by the most since 1987. Japanese Prime Minister Taro Aso said for a second day that a $250 billion U.S. bank bailout plan is ``insufficient.'' The auction was ``better than expected,'' said Keiko Onogi, a debt strategist at Daiwa Securities SMBC Co., one of the 24 primary dealers that are required to bid at auctions, in Tokyo. ``Bonds have been moving firmly as the Nikkei is fairly down because of concern about a serious recession.'' The yield on the 1.1 percent bond due September 2013 fell 3 basis points to 1.13 percent at 1:38 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.140 yen to 99.860 yen. Ten-year yields held at 1.58 percent. A basis point is 0.01 percentage point. Ten-year bond futures for December delivery gained 0.10 to 135.90 in Tokyo and the Nikkei 225 plunged as much as 10.4 percent, the most since 1987. `Insufficient' Plan ``People think the $250 billion plan is insufficient and that's why markets are falling,'' Prime Minister Aso told lawmakers in parliament in Tokyo today. Aso, who made similar remarks yesterday, said the lesson from Japan's bank bailout 10 years ago was that time is of essence. Japan pumped 12.4 trillion yen into its banks between 1998 and 2003 to help clear bad loans built up during the bubble economy. More than 9 trillion yen has already been repaid with the government generating a return in excess of 10 percent. ``Even though we have big announcements on bank bailouts, we are still waiting on the details and actual implementation,'' said Guthrie Williamson, portfolio manager in Sydney at Principal Global Investors, which manages $244.9 billion in assets globally. ``I remain bullish on government bonds because growth is slowing and interest rates will remain lower.'' The gain in bonds was limited by speculation the government will issue additional debt to help finance an economic fiscal package. Fiscal Premium ``Concerns of extra government notes are deeply rooted,'' said Kazuhiko Sano, chief strategist in Tokyo at Nikko Citigroup Ltd., a Japanese unit of the world's biggest bank by assets. ``Some investors may price in a fiscal premium and the market may turn bearish.'' Aso's administration may announce a second economic- stimulus package Oct. 24 and then dissolve the lower house before it's approved, the Yomiuri newspaper reported yesterday, citing ruling-party officials it didn't name. Japan's lower house last week approved a 1.8 trillion yen stimulus package. Debt sales to finance the plan may lead to a ``steepening'' of the yield curve, Nikko Citigroup's Sano said. The curve is a graph that plots the yields of bonds with different maturities The difference in yields between two- and 20-year debt widened to 1.29 basis points today, compared to a more than five-year low of 1.15 percentage points reached Oct. 10, according to data compiled by Bloomberg. Confidence in the world economy tumbled in October, a survey of Bloomberg users on six continents showed. The Bloomberg Professional Global Confidence Index fell to 4 from 11.3 in September, the lowest reading since the survey started in November. Sentiment dropped the most in Asia and Europe and was weakest in Japan. The results reflect responses from 3,764 Bloomberg users in more than 100 countries. ``The effects of the financial crisis has spilled out into the real economy, increasing deflation speculation,'' said Eiji Dohke, chief strategist at UBS Securities Japan Ltd. in Tokyo. To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.

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