JGBs fall though superlongs cut losses (Reuters) (13-01-2011)

TOKYO - Japanese government bonds dropped on Thursday, weighed down by the Nikkei average's rise to an eight-month high, though superlongs cut losses after a 600 billion yen ($7.2 billion) 30-year auction drew strong demand.

The 30-year yield was unchanged at 2.130 percent, pulling back from a one-month high of 2.165 percent hit earlier in the day when there was a culmination of selling by dealers making room and cutting prices before the sale.

The benchmark 10-year yield on the other hand, rose 2 basis points to 1.190 percent as curve players unwound steepening trades conducted as a precaution before the auction.

The 10-year/30-year yield spread tightened by 1.5 basis points to 94 basis points after widening earlier to a one-month high of 97 basis points.

March 10-year futures were down 0.13 point on the day at 140.03 after slipping to 139.89.

The Nikkei rose to a fresh eight-month high, buoyed by Wall Street gains and an easing in worries about the euro zone's debt crisis.

Source: Reuters