JGBs gain on soft US data, BOJ buying hopes

TOKYO, April 2 Mon Apr 1, 2013 10:12pm EDT

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TOKYO, April 2 (Reuters) - Japanese government bond prices rose on Tuesday even ahead of a 10-year bond auction later in the day, as unexpectedly weak U.S. factory data hurt share prices and as investors bet on more bond buying by the Bank of Japan.

* The yield on the current 10-year JGBs fell 0.5 basis point to 0.555 percent, off near-decade low of 0.510 percent hit last week.

* "The adjustment in Japanese share prices spurred buying in JGBs. I suspect European shares will also fall after the long weekend. It's difficult to short JGBs now," said a fund manager at a Japanese asset management firm.

* Japan's Nikkei stock average dropped to a three-week low after the weak Institute for Supply Management data suggested the U.S. economy was losing some momentum at the end of the first quarter as the effects of a tighter fiscal policy kicked in.

* The Ministry of Finance offered 2.4 trillion yen of 10-year bonds, reopening the current 328th issue maturing March 2023 with a 0.6 percent coupon. The auction results will be announced at 12:45 p.m. (0345 GMT).

* Market players said sentiment remained strong despite profit-taking in the past few days, helped by expectations that the Bank of Japan's new governor, Haruhiko Kuroda, will step up the bank's bond buying at its upcoming policy meeting on April 3-4.

* Super-long bonds, such as 20- and 30-year bonds, outperformed as investors snatched up these maturities as yields on shorter paper have fallen to painfully low levels.

* The 30-year bond yield fell 4.5 basis point to 1.505 percent, matching near 10-year low hit on Friday. The 20-year yield also fell 3.5 basis point to 1.385 percent.

* The benchmark five-year bonds were untraded. Its yield stood at 0.135 percent on Monday.

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