* BOJ begins long-term JGB purchases
* Ten-year yield falls, but still off record low of 0.315
* Nikkei climbs as much as 3.1 pct to above 13,000
By Dominic Lau
TOKYO, April 8 The Nikkei share average climbed
as much as 3.1 percent to hover near a 5-year high on Monday,
and bond prices inched up as investors responded positively to
the Bank of Japan's move to begin buying longer-dated bonds
immediately to beat deflation.
The central bank conducted its first government bond buying
operations on Monday and said it will buy 1 trillion yen of JGBs
with maturities of between five and 10 years, and 200 billion
yen of bonds with maturities exceeding 10 years.
Japanese government bond prices edged higher, although
trading was less volatile than on Friday when investors pocketed
some of the sharp gains, a day after the central bank announced
its sweeping monetary stimulus measures to revive the world's
"The BOJ's bazooka has sparked the buying of Japanese
stocks, especially domestic sectors, like real estate," said
Yasuo Sakuma, a portfolio manager at Bayview Asset Management.
"I am overweight domestic demand sectors rather than
"Weaker yen is good for Japanese stocks, especially
exporters. But the global economy...is relatively weak. Europe
is still in a slump, and the recovery pace of developing
countries like China and India is slower than expected."
The Nikkei was up 2.3 percent at 13,127.65 in late
morning trade, after earlier rising to 13,225.22, levels last
tracked in August 2008. The market shrugged off a
weaker-than-expected U.S. jobs report that raised concerns that
the recovery in the world's largest economy may be losing steam.
Real estate companies gained 4.3 percent,
outpacing the broader market once again after jumping nearly 12
percent on Friday.
The sector has surged nearly 110 percent since mid-November,
when Prime Minister Shinzo Abe unveiled in his election campaign
bold expansionary fiscal and monetary policies to revive the
world's third-largest economy. That compares with a 51 percent
rally in the benchmark Nikkei during the same period.
Lenders Mitsubishi UFJ Financial Group, Mizuho
Financial Group and Sumitomo Mitsui Financial Group
rose between 2.4 and 4.6 percent.
Apart from real estate companies, Sakuma said he also
preferred consumer financing firms as well as venture capital
firm Jafco Co Ltd, which surged 8.4 percent.
Major exporters such as Canon Inc, Toyota Motor
Corp and Honda Motor Co were also in demand,
up between 2.6 and 3 percent as the yen fell as much as
1.3 percent to 98.85 to the dollar, the lowest since June 2009.
JGB YIELDS DOWN
Yields on Japanese government bonds slipped as the BOJ
started its stimulus operations. The 10-year fell
4 basis points to 0.490 percent, after it swung violently from a
record low of 0.315 percent to a three-week high of 0.600
percent in Friday's trading.
The BOJ's massive stimulus steps promise to inject $1.4
trillion into the economy in less than two years by buying
government bonds across the yield curve as well as riskier
One of the BOJ's aims is to drive long-term interest rates
lower in the hope that Japanese companies will increase their
investments and households will raise their spending.
"We think the 10-year yield will approach 0.20 percent in
the coming months," said Maki Shimizu, senior strategist at
Citigroup in Tokyo.
But credit ratings agency Moody's Investors Service said the
central bank's effort merely buys time for the government to
implement a credible structural reform and fiscal consolidation
The five-year yield dipped 2 basis points to
0.160 percent, but the 20-year yield added 1
basis point to 1.140 percent.
Ten-year JGB futures rose 0.88 point to 144.90
after earlier hitting a high of 145.02.