JGB futures dip as stocks rise, auction eyed

By Rika Otsuka

TOKYO, Feb 19 (Reuters) - Japanese government bond futures dipped in quiet trade on Tuesday as investors took their cue from gains in Tokyo stocks.

But other than higher share prices, investors had few new factors to trade on, with no major economic data due out on Tuesday and U.S. financial markets having been closed on Monday for a national holiday.

Losses in JGBs were limited as market players were cautious about selling bonds on views that the Bank of Japan is unlikely to lift interest rates from the current 0.5 percent this year.

One focal point in the market is the Ministry of Finance's 700 billion yen ($6.5 billion) sale of 15-year floating rate JGBs on Tuesday.

The bonds are being offered in a reopening of the 47th 15-year floating JGB first issued in November and at a 45 basis point discount from the base rate. The base rate for the initial coupon payment is 1.67 percent.

"Poor results from the auction could spark a bond sell-off. But other than that, the government bond market is likely to be more influenced by moves in share prices this session," said Atsushi Ito, a JGB strategist at Morgan Stanley.

March 10-year JGB futures edged down 0.08 point to 137.37 2JGBv1, having recovered from a session low of 137.22 as Tokyo stocks gave up some of their gains.

The Nikkei share average .N225 was up 0.55 percent at 13,710.85 by midday after rising more than 1 percent in early trade.