JGB futures slip after Buffett's bond insurer offer

By Masayuki Kitano

TOKYO, Feb 13 (Reuters) - Japanese government bond futures edged lower on Wednesday after U.S. billionaire investor Warren Buffett offered to take over some liabilities of bond insurers, easing worries of a further deterioration in credit markets.

Selling of JGB futures by bond dealers looking to hedge their market exposure ahead of a five-year JGB auction this session may also be weighing on the market, analysts said.

"While Buffett's offer is not something that has any direct impact on Japanese markets, the way equities and U.S. Treasuries reacted is unfavourable for JGBs," said Chotaro Morita, chief fixed income strategist for Barclays Capital in Tokyo.

JGB traders continue to focus on just how deep the slowdown in the U.S. economy might be, and how the turmoil in credit markets will play out, Morita said.

March 10-year JGB futures fell 0.23 point to 137.90 2JGBv1. The 10-year JGB yield rose 2.5 basis points to 1.420 percent <JP10YTN=JBTC>.

The five-year JGB yield rose 2 basis points to 0.890 percent <JP5YTN=JBTC>.

Losses in JGBs were limited by lingering speculation that the Bank of Japan may cut interest rates later this year if the U.S. economy slips into recession and hurts Japan's growth.

Swap contracts on the overnight call rate show a roughly 40 percent chance of the BOJ cutting interest rates from the current 0.50 percent by the end of the year. <JPONIBOJ=TRDT>