JGB futures edge lower as Tokyo shares rise

By Masayuki Kitano

TOKYO, Feb 18 (Reuters) - Japanese government bond futures inched lower on Monday as gains in Tokyo share prices offset the positive impact from a rise in U.S. Treasuries late last week. Market expectations that the Bank of Japan was unlikely to raise interest rates soon have supported JGBs in recent weeks. But investors have also been reluctant to chase JGB prices higher as yields still remain close to two-year lows hit in January.

"During the day, JGBs are likely to take cues from moves in share prices," said Mari Iwashita, senior strategist at Daiwa Securities SMBC's fixed income research department, adding that a a rise in Tokyo share prices was weighing on JGBs.

March 10-year JGB futures fell 0.16 point to 137.31 2JGBv1, having pared gains after rising to as high as 137.62 earlier.

The benchmark 10-year JGB yield rose 1 basis point to 1.460 percent <JP10YTN=JBTC>.

The yield curve flattened slightly as super-long JGBs fared better than other sectors.

The 20-year JGB yield fell 1 basis point to 2.080 percent <JP20YTN=JBTC> and the 30-year yield dipped 0.5 basis point to 2.330 percent <JP30YTN=JBTC>.

In the stock market, the Nikkei share average rose 1.3 percent .N225.

"It seems like equities, including those overseas, are not reacting as much to negative news as they used to," said a portfolio manager for a Japanese insurer.