JGB futures edge up, investors see BOJ standing pat

By Satomi Noguchi

TOKYO, April 18 (Reuters) - Japanese government bond futures edged up on Friday, rebounding from a six-week low as investors focused afresh on the likelihood of the Bank of Japan holding interest rates steady.

JGBs had been in retreat as renewed stability in stock markets reduced expectations for a BOJ rate cut this year, with the implied chance of a quarter-point cut falling to around 12 percent from around 50 percent earlier this month <JPONIBOJ=TRDT>.

"The BOJ may not cut rates, but that does not mean it is going to raise rates," said a chief manager at bond trading section at a Japanese bank.

"JGBs have seen enough of a slide to correct their surge in March."

June 10-year futures 2JGBv1 rose 0.03 point to 138.92 and a recovery above 139.00 prompted some technical buying in thin trade to the day's high of 139.12. It had sunk to a six-week low of 138.72 the previous day.

The benchmark 10-year yield <JP10YTN=JBTC> was flat at 1.375 percent after matching a six-week high of 1.385 percent.

The five-year yield <JP5YTN=JBTC> fell a basis point to 0.895 percent, stepping back from a two-month high of 0.910 percent hit on Thursday.

Shorter-dated notes and euroyen futures had been hit hard this week as market players believed that new BOJ Governor Masaaki Shirakawa was set to maintain the central bank's hawkish stance emphasising the need to normalise monetary policy.