JGBs soar as stocks dive, yen jumps

TOKYO, June 13 Wed Jun 12, 2013 11:07pm EDT

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TOKYO, June 13 (Reuters) - Japanese government bonds soared on Thursday, with the benchmark 10-year yield dropping below the 0.8 percent level for the first time in nearly a month as stocks plunged in line with a resurgent yen.

* The 10-year JGB yield skidded 8 basis points to 0.795 percent, its lowest level since May 17, and moving away from a two-week high of 0.9 percent touched on Wednesday.

* Ten-year JGB futures ended morning trade up 0.77 point at 143.10.

* The yield on the 20-year bond fell 5 basis points to 1.645 percent, also moving away from a two-week high of 1.705 percent hit on Wednesday.

* The Nikkei share average plunged more than 5 percent on Thursday, after the dollar fell to a 10-week low against the yen as investors cut bullish positions on the U.S. currency amid uncertainty over whether the Federal Reserve will trim its stimulus programme.

* "Stocks reacted to the yen's strength, and that is why investors are buying bonds," said a fixed-income fund manager at a Japanese trust bank in Tokyo.

"Investors continue to adjust positions, with the BOJ's policy in focus," he added.

* Stocks came under more pressure earlier this week, when the BOJ kept monetary policy steady on Tuesday and held off on any new measures to calm bond markets.

* BOJ board member Sayuri Shirai said on Thursday that the central bank expects Japan's long-term rates to eventually stabilise at levels consistent with its 2 percent inflation target.

* The BOJ offered to buy outright in its regular market operations 450 billion yen ($4.70 billion) of JGBs with residual maturities of five to 10 years, and another 200 billion yen maturing in more than 10 years.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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