JGBs slip on weak U.S. Treasuries, firmer stocks

TOKYO, Oct 10 (Reuters) - Japanese government bonds slipped on Wednesday, taking their cues from a slide in U.S. Treasuries the previous session and a firm stock market.

Treasuries slipped on Tuesday on the view that the Federal Reserve may not cut interest rates this month after last week's firm U.S. jobs data soothed concerns about U.S. economic growth.

This has fuelled speculation that the Bank of Japan may have more leeway to raise interest rates this year.

Traders said investors were likely to buy bonds when yields rise as they reallocate funds in their portfolios for the second fiscal half-year that began this month, though this buying may be limited as the BOJ begins a two-day policy meeting on Wednesday.

"I expect the market to follow a similar trend from yesterday, trading weaker at the beginning on overseas moves, then seeing some dip-buying," said Tatsuo Ichikawa, fixed income strategist at ABN AMRO Securities.

December 10-year futures fell 0.25 point to 134.28 2JGBv1, nearing the two-month low of 134.14 hit on Tuesday.

The benchmark 10-year yield <JP10YTN=JBTC> was up 2 basis points at 1.730 percent, inching closer to Tuesday's high of 1.745 percent, which was the highest since early August.

Ichikawa said he expected the 10-year yield to trade between 1.710 and 1.745 percent and 10-year futures to move between 134.10 and 134.50 on Wednesday.

The two-year yield <JP2YTN=JBTC> edged up 1 basis point to 0.895 percent, a seven-week high.