JGB futures steady, focus on Tokyo share prices

By Masayuki Kitano

TOKYO, Feb 18 (Reuters) - Japanese government bond futures were steady on Monday as early gains in Tokyo shares offset the positive impact from a rise in U.S. Treasuries late last week. Market expectations that the Bank of Japan was unlikely to raise interest rates soon have supported JGBs in recent weeks. But investors have also been reluctant to chase JGB prices higher as yields still remain close to two-year lows hit in January.

"During the day, JGBs are likely to take cues from moves in share prices," said Mari Iwashita, senior strategist at Daiwa Securities SMBC's fixed income research department, adding that an early rise in the Nikkei was weighing on JGBs.

March 10-year JGB futures rose 0.02 point to 137.49 2JGBv1 as of 0058 GMT, having pared gains after rising to as high as 137.62 earlier.

The benchmark 10-year JGB yield slipped 1 basis point to 1.440 percent <JP10YTN=JBTC>.

In the stock market, the Nikkei share average rose 1 percent .N225.

U.S. Treasuries rose on Friday as a series of bleak reports suggested the U.S. economy may have tipped toward recession, boosting the allure of safe-haven government bonds.

A gauge of February factory activity in New York state posted its biggest drop on record to nearly a five-year low, while the Reuters/University of Michigan Surveys of Consumers index of consumer sentiment recorded its weakest reading since 1992.

Japanese indicators released on Monday showed signs of weakness in the domestic economy.