JGB futures up on weak economic outlook, auction eyed

By Satomi Noguchi

TOKYO, April 10 (Reuters) - Japanese government bond futures rose on Thursday helped by gains in U.S. Treasuries, while a fall in Tokyo stocks kept the safe-haven appeal of debt intact.

Bonds were also supported after weak machinery orders data confirmed the view that the nation's business sentiment is deteriorating, and underlined the Bank of Japan's view that the world's second-largest economy was slowing.

The BOJ dropped a reference to the economy expanding in a monthly report on Wednesday, a phrase it had used for nearly two years, after it left interest rate unchanged. [ID:nT209700]

An auction of five-year JGBs the same day is expected to draw solid demand, giving a boost to medium-term notes.

"The market is returning to a cautious mode ahead of earnings reports coming soon from U.S investment banks, thinking that the stability we saw in recent sessions will be short-lived again," said Maki Shimizu, a strategist at UBS Securities Japan.

June 10-year futures rose 0.43 point to 140.15 2JGBv1 as Tokyo's Nikkei share average fell 1.3 percent .N225.

The benchmark 10-year JGB yield edged down a basis point to 1.330 percent <JP10YTN=JBTC>.

The five-year yield fell 2 basis points to 0.795 percent <JP5YTN=JBTC>.