JGBs climb, buoyed by slide in equities
* JGBs get respite after slide in October
* But issuance worries seen tempering bond gainss
* MOF to raise mkt issuance to cover weak retail demand * MOF announcement late on Friday in line with expectations
TOKYO, Nov 2 (Reuters) - Japanese government bonds rose on Monday as they drew strength from a slide in equities, with the 10-year yield pulling away from a 2-½ month high hit last week.
This marked a reprieve after they were sold off the previous month, when they retreated on worries about the size and details of debt issuance for the rest of this fiscal year and next.
The benchmark 10-year JGB yield climbed 11 basis points in October, its biggest one-month rise since May 2008, and hit a 2-½ month high of 1.425 percent JP10YTN=JBTC on Friday.
Investors are likely trying to decide whether last week's drop in global equities marks a turning point, and it is too early to tell whether JGBs will see a significant short-covering rally, said Makoto Yamashita, chief Japan interest rate strategist for Deutsche Securities.
"I still think an upward trend (for equities) remains in place. There is still no clear data to suggest there will be a double-dip in economic fundamentals," Yamashita said, referring to the outlook for the global economy.
December 10-year JGB futures rose 0.28 point to 138.27 2JGBv1, pulling away from a 2-½ month low of 137.64 hit last week.
The benchmark 10-year yield fell 3 basis points to 1.375 percent JP10YTN=JBTC.
The yield curve flattened as superlongs outperformed, with the 30-year yield dropping 5 basis points to 2.220 percent JP30YTN=JBTC and the 20-year yield falling 3.5 basis points to 2.095 percent JP20YTN=JBTC.
The JGB market will be closed on Tuesday for a national holiday in Japan.
Japan's Nikkei share average fell 2.3 percent .N225 after the U.S. Dow industrials index suffered its worst slide since July on Friday on concerns that the economic recovery won't be robust enough to sustain the seven-month stock rally.
U.S. Treasuries climbed on Friday due to the slide on Wall Street.
The Ministry of Finance's plans, announced late on Friday, to issue more JGBs to institutional investors this fiscal year to offset weak demand for JGBs among retail investors was broadly in line with market expectations, analysts said. Continued...
