JGBs tumble as Treasuries hit by Fannie, Freddie takeover

* JGB futures hit as Treasuries slide on Freddie, Fannie

* Anomalies remain in futures before contract roll-over

* Futures volume remains relatively light, exacerbating moves

* Doubts of fast recovery in growth, financials support JGBs

By Chikako Mogi

TOKYO, Sept 8 (Reuters) - Japanese government bonds tumbled on Monday on a slide in U.S. Treasuries, as the U.S. government's takeover of mortgage giants Fannie Mae and Freddie Mac pushed stocks sharply higher and dampened investors' appetite for safe-haven bonds.

The takeover of the U.S. finance companies is the latest move by Washington to shore up the slumping housing market and was taken to ward off more global financial market turbulence. [ID:nN07479172] [ID:nN07463067]

Benchmark 10-year Treasury yields rose as high as 3.900 percent US10YT=RR in Asia trading on Monday, up 19 basis points from 3.708 percent in late U.S. trade on Friday. [US/]

The rescue plan sent U.S. stock index futures soaring, and the Nikkei average .N225 jumped 3.6 percent at one point after closing up 3.4 percent on Monday, posting its biggest percentage gain in five months.

"The initial reaction to the U.S. government takeover of the mortgage companies is to sell JGBs, pushing yields higher," said Naomi Hasegawa, a senior fixed-income strategist at Mitsubishi UFJ Securities.

September 10-year futures 2JGBv1 tumbled as low as 136.94, down 1.74 points on the day, before ending the day session at 137.32, 1.36 points lower and posting the biggest one-day drop since late April. They hit a five-month peak of 139.09 on Friday.

Despite the big price action, trading volume in the lead contract stayed below Thursday's 63,771 contracts, a four-month high.

Market players remained wary of the uncertain outlook in the futures market, which has seen volatile swings over the past few weeks, with traders citing commodity trading advisers, or CTAs, and other hedge funds as behind the swings.

The key 10-year yield JP10YTN=JBTC jumped as much as 9 basis points to a one-month high of 1.550 percent, before easing to 1.525 percent, up 6.5 basis points on the day, and moving away from a four-month low of 1.400 percent hit late in August.

Despite the selling pressure, investors were scooping up cash bonds on dips as investors believe it will still take time before the U.S. housing market recovers, the economy regains strength and the financial system is stabilised.

Cash bond yields rose across the board, helping to revive investor appetite for the bonds at current yield levels, particularly the five-year sector ahead of Tuesday's auction.