JGB futures soar to 3-yr high on US financial woes

By Chikako Mogi

TOKYO, March 17 (Reuters) - Japanese government bond futures jumped to a three-year high on Monday, surging with Treasuries as the acquisition of Bear Stearns by JPMorgan Chase underscored the severe problems plaguing the U.S. financial system.

The Federal Reserve cut its discount rate and launched a new discount lending facility for primary dealers, but the Fed's latest efforts did little to assuage investors rattled by the broadening credit market troubles.

June futures jumped as much as 0.98 point to 141.25, the highest since July 2005.

"Deepening worries about the U.S. financial system are behind the JGB market moves," said Naomi Hasegawa, senior fixed-income strategist at Mitsubishi UFJ Securities.

"The rise in JGBs is driven by futures, while there is little trading in the cash bond market," she said, adding that foreign players and hedge funds continued to unwind bad bets on curve flattening positions, weighing on super-long maturities.

Japanese investors were also seen looking to sell on a rebound to book profits as they seek to cover losses made on other securities holdings such as stocks, Hasegawa said.

Some hedge funds that bet on the macroeconomic outlook were seen buying futures and selling stock futures, traders said.

June 10-year futures 2JGBv1 ended the morning session at an intraday high of 141.25, up 0.98 point on the day.