Recasts and writes through with government comment

By Anton Bridge

TOKYO, June 19 (Reuters) - Japan's Norinchukin Bank NORB.UL said on Wednesday it plans to sell around 10 trillion yen ($63.4 billion) of U.S. and European government bonds to stem losses from bets that went awry when overseas interest rates stayed higher for longer than expected.

The country's main financial institution for farm, forestry and fishery cooperatives also now expects a net loss of around 1.5 trillion yen this financial year, three times its previous estimate, a spokesperson for the bank said.

The plan comes after Norinchukin, hit hard by valuation losses, said in May it was looking at raising 1.2 trillion yen to shore up its capital and would restructure its portfolio to replace low-yielding securities with high-yielding ones.

Japan's Chief Cabinet Secretary Yoshimasa Hayashi told a regular briefing that the government would closely monitor the situation for any potential impact on Norinchukin's affiliate financial institutions but added that he believed the bank's financial health was "sufficient".

The sale is expected to make up between a fifth and sixth of Norinchukin's portfolio, which totals around 56 trillion yen, the spokesperson said, adding that the exact value of bonds sold and final loss will depend on market conditions.

The bank logged 1.77 trillion yen in valuation losses for the past financial year that ended in March, compared with 946 billion yen the previous year.

Norinchukin has been caught out by its overseas securities exposure in the past. After the 2007-2009 global financial crisis, it had to raise 1.9 trillion yen in capital from member banks following losses from investments in securitised products.

The news of planned bond sale was first reported by the Nikkei business daily.

($1 = 157.8300 yen)

(Reporting by Anton Bridge; Editing by Stephen Coates and Edwina Gibbs)

((Anton.Bridge@thomsonreuters.com;))