Japanese govt bonds end morning lower as stocks rally

Japanese govt bonds end morning lower as stocks rally

	Published : Mon, 27 Aug 2007 04:30 By : Agencies Print this Story

TOKYO (Thomson Financial) - Japanese government bonds ended the morning session mostly lower Monday as investors shifted their attention to stocks after Wall Street racked up solid gains Friday, backed by positive new home sales data in the US.

In the stock market, the blue-chip Nikkei 225 Stock Average ended the morning up 1.1 percent at 16,421.89, topping the key 16,500 mark briefly for the first time since August 15.

Despite the lack of investor interest, bond prices remained well-supported by talk of technical demand from index funds around the end of the month. Gains in US Treasury bonds Friday on upbeat new home sales and other economic data also helped encourage mild bargain-hunting.

'(Subprime) concerns are still there, although they have been easing since the Federal Reserve implemented a discount rate cut (on August 17),' said Akitsugu Bando, strategist at Okasan Securities.

'Investors are monitoring further developments in the US and will probably take their minds off the worries if there are no more bad news,' he said.

Investors are paying attention to the US existing home sales data to be released later Monday.

At midday, the yield on the benchmark 10-year bond was at 1.595 percent, up from 1.590 percent at the close Friday.

The two-year note ended the morning without transactions, while the yield on the five-year note rose to 1.170 percent from 1.160 percent.

The yield on the 20-year bond was 2.065 percent, up from 2.060 percent. The 30-year bond remained without transactions.

Bond prices move inversely to yields.

The price of the September futures contract for 10-year bonds slipped to 135.49 yen from 135.53 yen at the close Friday.

(1 US dollar = 116.34 yen)

yumiko.nishitani@thomson.com

yn/jg

yun/jg

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.