JGBs gain after a 3-days of losses (Reuters) (02-03-2011)

TOKYO - Japanese government bonds rose on Wednesday, with futures leaving back a three-day losing streak, as Tokyo shares dropped on concerns that rising oil prices will hurt global economic recovery.

The Nikkei dropped 2.4 percent, erasing gains made over the past three days and falling through the psychological level of 10,500.

March 10-year futures were up 0.35 point at 139.70, hovering above a 25-day moving average after falling slightly below it on Tuesday.

The benchmark 10-year yield lost 4.5 basis points at 1.260 percent, pulling away from a 10-month high of 1.350 percent struck last month. The 20-year yield was 2.5 basis points lower at 2.010 percent.

The 5-year yield dropped 3 basis points to 0.520 percent, while the 2-year yield was 1 basis point lower at 0.230 percent.

The 5-year/10-year yield spread widened to around 75 basis points, the widest since mid-January as domestic investors were seen buying medium-term bonds.

There was selling in the four-year sector, while Japanese banks were said to be buying longer maturities such as 10 years.

There was a limited reaction in JGB markets to remarks by Bank of Japan Governor Masaaki Shirakawa at a lower house financial committee meeting in parliament on Wednesday.

Source: Reuters