JGB futures track Treasuries higher in thin trade

By Masayuki Kitano

TOKYO, April 30 (Reuters) - Japanese government bond futures rose on Wednesday in thin trade as JGBs took a breather after a recent sell-off that pummelled futures and pushed 10-year yields to six-month highs. JGB 10-year futures opened 0.40 point higher than Monday's close and the lead December three-month euroyen futures contract rose 5 basis points in early trade as traders returned after taking Tuesday off for a Japanese holiday.

JGBs received a boost after U.S. Treasuries rose on Tuesday due to bleak data on consumer confidence and the housing sector, and also drew support from a weaker-than-expected reading on Japanese industrial production, analysts said. "It seems like the pullback in JGBs that took place on Monday and last Friday may be over," said Mari Iwashita, a senior strategist in Daiwa Securities SMBC's fixed-income research department.

Given the moves in U.S. financial markets on Tuesday and lingering worries about the fallout from credit market turmoil it may be hard to keep selling JGBs aggressively, Iwashita said.

June 10-year JGB futures rose 0.16 point to 135.76 2JGBv1. Trading activity was light ahead of more Japanese holidays early next week, with total trading volume standing at around 11,300 contracts about 50 minutes after the opening of trade.

The benchmark 10-year JGB yield slipped 0.5 basis point to 1.615 percent <JP10YTN=JBTC>, having come off a six-month high of 1.675 percent hit on Monday.

JGBs futures had suffered their biggest sell-off in five years on Friday, a move that triggered a brief halt in trading.

The lead three-month euroyen futures contract rose 5 basis points on Wednesday to 98.955 JEYv1.

Data released on Wednesday showed that Japan's industrial output fell 3.1 percent in March from a month earlier, below a market median forecast for a 0.8 percent drop. [JPIP1=ECI]