JGBs edge lower on Treasuries, stock market gains

TOKYO, Oct 15 (Reuters) - Japanese government bonds edged lower on Monday, tracking a fall in U.S. Treasuries in the previous session, while a gain in Tokyo shares also prompted investors to trim positions.

Treasuries fell on Friday after firm economic data eroded expectations of a Federal Reserve rate cut this month, which in turn increased the likelihood of a Bank of Japan interest rate hike this year or early next year.

But with little major domestic economic data due out soon, most investors refrained from taking big positions and looked to developments in overseas markets and the performance of domestic stocks for direction, analysts said.

"The JGB market may not move much until there is a shift in expectations for a Fed interest rate cut after Fed's Beige Book and housing data this week," said Tetsuya Miura, a bond strategist at Shinko Securities.

December 10-year futures 2JGBv1 fell 0.25 point to 134.47, trading in a range above their two-month low of 134.14 hit last week.

The benchmark 10-year yield <JP10YTN=JBTC> rose 1.5 basis points to 1.715 percent.

The five-year yield <JP5YTN=JBTC> rose 3 basis points to 1.260 percent.

Traders said super-long JGBs were trading heavily as dealers sold them to hedge ahead of Tuesday's 30-year bond auction.

The 30-year yield <JP30YTN=JBTC> rose 3.5 basis points to 2.505 percent, matching its highest level since late July touched last week.