JGBs rise in thin FY-end trade as Nikkei falls

By Masayuki Kitano

TOKYO, March 31 (Reuters) - Japanese government bond futures rose on Monday in thin trade on the last day of Japan's fiscal year, as a fall in Tokyo share prices bolstered demand for safe-haven government debt. Gains were led by futures, with domestic investors sidelined due to the fiscal year-end, said Naomi Hasegawa, senior fixed income strategist for Mitsubishi UFJ Securities.

"It seems like some traders are making a try for the upside in thin market conditions," she said.

June 10-year JGB futures rose 0.35 point to 141.02 2JGBv1. Total trading volume was relatively light, at 14,624 contracts.

The benchmark 10-year JGB yield fell 2 basis points to 1.250 percent <JP10YTN=JBTC>, edging back towards a three-year low of 1.215 percent struck last week.

The Nikkei share average fell 1.5 percent .N225.

A rise in U.S. Treasuries on Friday due to persistent worries about the health of the financial sector, was another positive factor for JGBs.

In the money market, the Bank of Japan offered to supply 1.5 trillion yen ($15.16 billion) in funds via a same-day operation to temper rises in the overnight call rate at the fiscal year-end.

The size of the fund injection was slightly above market expectations, money traders said, adding that Japanese banks were seen tapping funds at as high as 0.62 percent earlier, while foreign banks had been seeking cash at even higher rates.