JGB futures slip as Nikkei inches higher

TOKYO, April 20 (Reuters) - Japanese government bond futures fell slightly on Friday as Tokyo share prices inched higher, easing some jitters about the possibility of a sell-off in global equities markets. The Nikkei share average's 1.67 percent slide on Thursday and a 4.5 percent tumble in Chinese shares sparked concerns about a possible repeat of the stock market downturn that followed a plunge in Chinese shares in late February.

"There was some worry that there might be a decline in global equities markets triggered by moves in China," said Naomi Hasegawa, senior fixed income strategist for Mitsubishi UFJ Securities.

But the Nikkei's 0.3 percent rise .N225 this morning, coupled with the fact that U.S. stocks ended nearly flat on Thursday despite the drop in Asian shares, helped soothe such concerns, at least for now, Hasegawa said.

Hasegawa said market players would likely continue to keep a close eye on moves in share prices, including Chinese shares.

June 10-year JGB futures fell 0.04 point to 133.86 2JGBv1 as of 0046 GMT, edging back towards a three-month low of 133.41 hit on Wednesday. The benchmark 10-year JGB yield slipped 0.5 basis point to 1.670 percent JP10YTN=JBTC.

JGBs are still down on the week, with June futures stuck below last Friday's close of 134.12, after falling earlier this week on caution ahead of the BOJ's twice-yearly outlook report on economic and price developments to be released next Friday.

But JGBs were seen likely to remain supported on dips as many market players think the BOJ is unlikely to raise interest rates until the July-September quarter at the earliest, given a lack of consumer price inflation.

Investors, however, are also reluctant to chase JGBs higher due to the expectations for the BOJ to raise interest rates gradually, and many market players expect JGBs to be stuck in range trading for a while.