JGBs 10-yr yield falls to 4-week low in line with stronger Treasuries

TOKYO Thu Feb 21, 2013 10:07pm EST

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TOKYO Feb 22 (Reuters) - Japan government bonds rose on Friday, with the benchmark yield dropping to a four-week low in line with firmer U.S. Treasury prices on fading fears the U.S. central bank will curb its asset buying soon.

* Treasuries rose on Thursday following several U.S. data pointing to slow economic growth, such as weekly jobless claims and factory activity, which calmed bond investors' fears that the U.S. Federal Reserve would reduce to halt its asset purchases before the end of this year.

* "The Bank of Japan will ease further, and the Fed will keep its easy policy for the time being, and this is supportive for bonds," said a fixed-income fund manager at a European asset management firm in Tokyo.

* The yield on 10-year bonds shed 1.5 basis points to 0.720 percent, its lowest since Jan. 25.

* Ten-year JGB futures ended morning trade up 0.14 point at 144.57, after rising as high as 144.60, their highest since Dec. 13.

Futures are now above both their 55-day moving average at 144.23 as well as their 100-day moving average, now at 144.26.

* The superlong tenor rebounded on bargain-hunting after underperforming in the previous session following a lacklustre 20-year sale. Life insurers were said to be buyers, market participants said,

The 30-year yield fell half a basis point to 1.935 percent, while the 20-year yield slipped 1.5 basis points to 1.730 percent, matching a four-week low touched several times this week.

* The five-year yield was flat at a record low of 0.130 percent hit earlier this week, on expectations that the Bank of Japan will eventually increase the time left to maturity - currently three years - of JGBs bought in its asset purchase programme.

* Economics Minister Akira Amari kept the government's heat on the central bank said on Friday, telling reporters after a regular cabinet meeting that "decisive steps" by the BOJ would help raise people's inflation expectations.

The central bank in January doubled its inflation target to 2 percent and made an open-ended pledge to buy assets from next year in an attempt to pull the country out of deflation.

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