JGB futures approach one-month high on weak data

By Satomi Noguchi

TOKYO, March 5 (Reuters) - Japanese government bond futures rose on Wednesday, nearing a one-month high after weak figures on spending by Japanese companies stirred worries about the domestic economic outlook and prompted investors to buy government debt.

A Ministry of Finance survey showed Japanese companies reduced spending on plant and equipment by 7.7 percent in October-December from the same quarter a year earlier, the biggest drop since 2002 and much more than an expected decline of 2.0 percent. [ID:nTKU003074]

The weak capital spending figures hurt Tokyo stocks and pointed to a sharp downward revision in growth figures for the same quarter due next week, supporting buying of government bonds, analysts said.[ID:nT231998]

"The headline figures on the survey showed a much bigger decline in corporate spending than expected, and that pushed market players back towards buying bonds," said Katsutoshi Inadome, a fixed-income strategist at Mitsubishi UFJ Securities.

March 10-year futures 2JGBv1 rose 0.21 point to 138.65, rebounding towards a one-month high of 138.93 hit on Monday.

JGBs had rallied in the past week on growing expectations that a downturn in the U.S. economy will hurt Japan and could prompt the BOJ to lower interest rates by the end of the year.

That view had strengthened after the dollar hit a three-year low against the yen earlier this week as investors grew more concerned about the chance of falls in profits at exporters, an engine for the Japanese economy.

The lead futures contract at one stage earlier this week had rebounded more than 2 points from 136.89 struck last week, the lowest since late December.