JGBs steady as cenbanks seek to soothe money mkt

By Masayuki Kitano

TOKYO, Dec 13 (Reuters) - Japanese government bond futures edged up on Thursday, even though U.S. Treasuries fell overnight after overseas central banks banded together to soothe stressed money markets. The U.S. Federal Reserve, the European Central Bank and the central banks of Canada, England and Switzerland announced steps on Wednesday to make it easier for stressed banks to access cash in the hopes of quelling a credit crunch. [ID:nN12621509]

The initiative gave a boost to U.S. equities and eroded safe haven demand for government debt, triggering a sell-off in U.S. Treasuries.

While JGB futures opened lower, their declines were modest compared to Treasuries, and JGBs pared their losses on a 1.2 percent decline in the Nikkei share average .N225.

JGBs were supported by market expectations the Bank of Japan will likely have a hard time raising interest rates from 0.50 percent at least until the latter half of next year, analysts said.

"The market is waiting for investors to buy on dips as the Nikkei share average is weak," said Akitsugu Bandou, senior strategist for Okasan Securities.

"I thought JGBs would be a bit lower, but they opened higher than I expected and are looking pretty firm," Bandou said.

March 10-year JGB futures opened 0.21 point lower at 136.44, but later recouped their losses and were up 0.05 point at 136.70 2JGBv1 by the end of morning trading.

The benchmark 10-year JGB yield was unchanged at 1.510 percent <JP10YTN=JBTC>, after having risen by as much as 1.5 basis points to 1.525 percent earlier in the day.