JGB futures rise on Treasuries gain, Nikkei slide

By Shinichi Saoshiro

TOKYO, June 19 (Reuters) - Japanese government bond futures rose on Thursday as overnight gains in U.S. Treasuries and a slide in equities increased the appeal of government debt.

JGBs have enjoyed a bullish week as interest rate hike expectations in the United States and Europe have been curbed, while views that the Bank of Japan won't boost rates later this year triggered a wave of bond buying.

Such views were compounded by the Reuters Tankan released on Thursday. The survey of leading Japanese manufacturers, which tracks the BOJ's influential Tankan survey, showed business sentiment in June matched a five-year low set in May.

The weak reading suggests the BOJ's June tankan survey due on July 1 will likely show a worsening of business sentiment from three months earlier, heightening views the central bank will keep rates on hold at least until early next year.

"The fall in the manufacturers' index was particularly big and confirmed our view that the BOJ's Tankan will turn out weak," said Yasuo Yamamoto, senior economist at Mizuho Research Institute.

"The BOJ is taking a neutral stance on monetary policy for now, but I think it's focusing somewhat more on downside economic risks. It's quite unlikely the bank will raise interest rates," he said.

Lead 10-year September JGB futures were up 0.18 point at 133.82 2JGBv1 on Thursday.

The benchmark 10-year yield slid 2 basis points to 1.755 percent JP10YTN=JBTC.

The Nikkei share average .N225 fell nearly 2 percent in early trade, weighed down by a firmer yen and an overnight fall on Wall Street. [.T]