JGBs dip with Treasuries before US payrolls data

By Eric Burroughs

TOKYO, Oct 4 (Reuters) - Japanese government bonds dipped on Thursday, mimicking a drop in Treasuries after data showing signs of an improvement in the U.S. labour market stoked expectations for an upbeat payrolls report on Friday.

Activity has been lacklustre this week as investors stick to the sidelines before the U.S. payrolls data to gauge how much more the Federal Reserve could cut interest rates and the potential impact on the Bank of Japan.

December 10-year futures 2JGBv1 fell 0.18 point to 134.72, slipping back towards a six-week low of 134.32 struck last week.

"Investors haven't really set their near-term trading strategies and are waiting for the payrolls data," said Maki Shimizu, an interest-rate strategist at UBS.

"If the data is strong, the BOJ could be confident about policy normalisation, not this month but before year-end," she said.

BOJ Deputy Governor Kazumasa Iwata struck a cautious note in a speech to business leaders in southwestern Japan, saying that the central bank needs to closely examine risks to the outlook and that there was a heightened risk of a U.S. slowdown. [ID:nTKV002906]

Iwata will also hold a news conference at 0500 GMT.

Iwata, seen as cautious about normalising monetary policy, voted against the BOJ's decision to last raise rates to 0.5 percent in February, later saying he opposed the move due to uncertainty on the consumer price outlook.