if (r->keepalive) {
if (clcf->keepalive_timeout == 0) {
r->keepalive = 0;

} else if (r->connection->requests >= clcf->keepalive_requests) {
r->keepalive = 0;

} else if (r->headers_in.msie6
&& r->method == NGX_HTTP_POST
&& (clcf->keepalive_disable
& NGX_HTTP_KEEPALIVE_DISABLE_MSIE6))
{
/*
* MSIE may wait for some time if an response for
* a POST request was sent over a keepalive connection
*/
r->keepalive = 0;

} else if (r->headers_in.safari
&& (clcf->keepalive_disable
& NGX_HTTP_KEEPALIVE_DISABLE_SAFARI))
{
/*
* Safari may send a POST request to a closed keepalive
* connection and may stall for some time, see
* https://bugs.webkit.org/show_bug.cgi?id=5760
*/
r->keepalive = 0;
}
}

Note r->keepalive only effect that Connection filed in response header and set keepalive timer when finalize request
Why place this code block in ngx_http_update_location_config? Would be better place it when set keepalive timer?
And maybe ngx send "Connection: keep-alive", but close connection in present 1.10.1, and this would be nothing seriously
So why is it the expected behaviour?