JGB futures dip, investors eye U.S. bailout plan
* JGB futures fall, trading volumes light
* Investors eye U.S. debate over $700 billion bailout plan
* 20-year JGBs outperform, yield curve flattens
TOKYO, Sept 24 (Reuters) - Japanese government bond futures fell in light trading on Wednesday as investors waited for U.S. lawmakers to approve the U.S. government's $700 billion bailout for financial firms.
Losses were limited, with JGBs drawing support from concerns about the domestic economy's outlook and market expectations for the Bank of Japan to hold off from raising interest rates for a while.
Trading volumes were light, partly because investors were reluctant to trade actively with the first half of Japan's fiscal year drawing to a close next week, market players said.
"Basically there is not much activity and market players are in wait-and-see mode," said a portfolio manager for a Japanese insurer, adding that investors were waiting for the U.S. government's bailout plan to be finalised.
The Bush administration's push for quick congressional approval of a $700 billion bailout for financial firms hit a wall of opposition on Tuesday among senators who said the plan puts taxpayers at excessive risk. [ID:nN23305681]
December 10-year JGB futures fell 0.14 point from Monday's close to 136.89 2JGBv1. Tokyo financial markets were closed on Tuesday for a national holiday.
Futures had hit a 5-½ month peak of 140.35 last week, when JGBs soared on safe-haven buying after the collapse of investment bank Lehman Brothers (LEHMQ.PK).
The benchmark 10-year JGB yield rose 1 basis point to 1.495 percent JP10YTN=JBTC.
The super-long sector fared better and the yield curve flattened as a result, with 20-year yields falling 2.5 basis points to 2.115 percent JP20YTN=JBTC.
JGBs showed limited reaction to news that Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N) will invest $5 billion in Goldman Sachs Group Inc (GS.N).
U.S. Treasuries fell in Asia following the news, with the benchmark 10-year U.S. Treasury yield rising by as much as 5 basis points from late U.S. trading on Tuesday to 3.856 percent US10YT=RR, although Treasuries later trimmed some losses.
The Bank of Japan injected 1.5 trillion yen ($14.19 billion) in same-day funds to help alleviate tightness in the yen money market, bringing the total of its same-day fund injections in the wake of the collapse of Lehman Brothers to 14 trillion yen.
The overnight call rate had been traded near 0.6 percent ahead of the BOJ's operation, above the central bank's 0.5 percent policy target, reflecting funding needs among foreign financial institutions, money market traders said. (Additional reporting by Chikako Mogi; Editing by Chris Gallagher)
