950809

Japanese govt binds

futures close higher

TOKYO: Japanese government bond (JGB) futures ended Tokyo firmer, but trading was subdued and directionless in the absence of decisive factors, dealers said.

Participation was limited to dealers, with many investors away on summer holidays, they added.

"About the only incentive is the buy-back demand for the September ahead of an upcoming shift in its benchmark status," said a dealer at one of Japan's "Big Four" securities houses.

The benchmark September futures finished up 0.05 at 118.55 after moving in a narrow range of 118.33 to 118.76. Traded volume was 49,228 contracts.

The market had opened higher as the yen's overnight firnmess against the dollar induced dealer short-covering.

Some dealers also said the limited participation by Japanese investors at Tuesday's U.S. Treasuries auction was another factor giving support to yen bonds.

Japanese investors are believed to have bought about 10 to 15 percent of the $18.0 billion worth of the three-year note auction on Tuesday, the first leg of the U.S. quarterly refunding, bond and currency dealers in Tokyo said.

"We're relieved by the less-than-expected participation," said a trust bank dealer.

Focus had been on the Japanese investors' participation following the Ministry of Finance's deregulation package to encourage overseas investment, announced last Wednesday.

Dealers said the yen bonds are likely to lack direction until investors come out into the market.

At 0708 GMT, the benchmark 174th 10-year bond was yielding 3.040 percent against its 3.035 close on Tuesday.-
Reuter