JGB futures drop as Treasuries slide, Nikkei rises

* Slide in U.S. Treasuries sparks JGB selling

* Some investors sell government bonds to secure cash

* Nikkei rebounds after a plunge, hitting JGBs

By Rika Otsuka

TOKYO, Oct 9 (Reuters) - Japanese government bond futures dropped on Thursday, tracking an overnight plunge in U.S. Treasuries, while investors also dumped bonds in anticipation of new debt supply.

Concern that coordinated interest rate cuts by major central banks abroad may not help revitalise frozen global money markets further stoked credit jitters, prompting some investors to sell government debt to secure cash.

"It is getting to the point that some people are now cashing in long-term Treasuries in an attempt to seek safety. That is happening in Japan, as well," said Hidenori Suezawa, chief fixed-income strategist at Daiwa Securities SMBC.

Investors believe Japanese Prime Minister Taro Aso, fearing defeat in a national election expected sometime in the near future, will take steps to stimulate Japan's economy before calling such a poll.

That would likely lead to a rise in government debt issuance, which also spurred selling of bonds, Daiwa's Suezawa said.

December 10-year JGB futures 2JGBv1 fell 0.43 point to 139.12 after hitting an intraday low of 138.20.

The Nikkei share average .N225 was up 1.2 percent a day after it suffered its worst one-day drop since the 1987 stock market crash. [.T]

The benchmark 10-year yield rose 3 basis points to 1.405 percent JP10YTN=JBTC, climbing from a six-month low of 1.355 percent struck on Tuesday.

The five-year yield was up 2.5 basis points to 0.990 percent JP5YTN=JBTC.

Foreign investors sold a net 890 billion yen ($9 billion) of Japanese bonds last week after dumping a net 1.2 trillion yen of Japanese bonds the week before, Ministry of Finance data showed on Thursday. [JP/CAP]

U.S. Treasuries plunged on Wednesday on expectations of a tide of new debt supply and after a tepid reaction in an auction of an older 10-year note issue.