JGBs supported, superlongs outperform on half-year-end bids

TOKYO, Sept 25 Mon Sep 24, 2012 10:43pm EDT

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TOKYO, Sept 25 (Reuters) - Japanese government bond prices were supported on Tuesday following soft German business sentiment data, with longest maturities outperforming on buying by Japanese investors ahead of half-year book-closing at the end of the month.

* The 10-year JGB futures were up 0.01 point at 143.95. That level reflected a 50 percent retracement of its July-August decline, which was driven primarily by unwinding of safe-haven buying due to concerns about the European debt crisis.

* The 144 mark in the futures is seen as a major resistance for now. Above that, another resistance is seen at 144.12, the 61.8 percent retracement of the same decline.

* The 10-year cash bond yield stood flat at 0.790 percent , matching a three-week low hit on Monday.

* Longer maturities, such as 20- and 30-year bonds, fared better as they attracted bids from Japanese investors such as life insurers ahead of the last day of their financial half year on Sept. 30.

* "For those investors who haven't bought much this half-year, the longer maturities look the most attractive given the hefty spreads" over shorter maturities, said a fund manager at a Japanese asset management firm.

* The yield spread between 10- and 30-year bonds widened to a four-year high of 114 basis points last Thursday and stood at a still hefty 111 basis points. That compared with 94 basis points at the start of this financial year in April.

* The 30-year bond yield fell 1.0 basis point to 1.900 percent while the 20-year yield fell 0.5 basis point to 1.650 percent.

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