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JGB 10-year yield hits 1-month low as stocks slump
* JGB 10-year yield hits 1-month low of 1.430 percent
* Nikkei's 4 percent fall spurs JGB buying
* Twenty-year JGBs edge up before MOF auction
TOKYO, Nov 20 (Reuters) - Ten-year Japanese government bond yields fell to a one-month low on Thursday as fears of a global recession and a slide in Tokyo share prices bolstered demand for safe-haven government debt.
JGBs also got a boost after U.S. Treasuries rallied the previous day on firming bets that the Federal Reserve will cut rates as the economy worsens and market players dumped risky assets and sought safety in Treasuries.
"JGBs are following the trend seen overseas, where bonds rose and equities fell," said Shinji Ebihara, a quantitative analyst for Mizuho Securities.
Data released on Thursday showed that Japan's exports logged their biggest annual decline in seven years in October, reinforcing worries the global financial crisis may push the economy deeper into recession.
Exports to Asia declined for the first time since 2002, while China-bound shipments also fell, that data showed. [ID:nT254579]
The 10-year JGB yield fell 1.5 basis point to 1.450 percent JP10YTN=JBTC after dropping earlier to 1.430 percent, the lowest since early October.
December 10-year JGB futures rose 0.28 point to 139.11 2JGBv1. They rose as high as 139.34 earlier, the highest in a month.
In the stock market, the benchmark Nikkei share average slid 4 percent .N225.
A near-term focal point is the Ministry of Finance's auction of 900 billion yen ($9.42 billion) in 20-year JGBs later on Thursday. The offer amount has been increased by 100 billion yen from 800 billion yen at the previous offer in October.
The MOF said it was offering the 20-year paper as a re-opening of the 105th 20-year JGB with a coupon of 2.1 percent.
Despite the increased issuance amount, demand at the auction is unlikely to be too weak because dealers are looking to cover short positions in 20-year JGBs, said Ebihara at Mizuho Securities.
The MOF announced in October that it would increase the monthly issuance amount of 20-year JGBs for November to March as part of a move to scrap the issuance of 10-year inflation-linked and 15-year floating-rate government bonds for the rest of 2008.
The 106th 20-year JGB yield fell 3 basis points to 2.110 percent JP20YTN=JBTC. (Reporting by Masayuki Kitano; Editing by Chris Gallagher)
