TOKYO (Thomson Financial) - Japanese government bond prices ended Monday
morning mixed as investors generally kept to the sidelines, waiting for the
European and US markets to reopen and provide fresh clues about the outlook for
global financial markets.
The European and US markets were closed Friday for public holidays.
"Investors maintained a wait-and-see stance, focusing on technical factors
to pick bargains on the longer end of the yield curve and take profits on
relatively high-priced medium- to shorter-term notes," said Akitsugu Bando, a
strategist at Okasan Securities.
Investors had a limited reaction to the latest government data revealing a
sharp deterioration in corporate sentiment, as the poor reading was only another
example of the cautionary signals investors have been receiving, he said.
The business sentiment diffusion index for large Japanese companies dropped
to minus 9.3 in the first quarter from plus 0.5 in the previous quarter,
reflecting growing concern about profits amid higher procurement costs and
uncertainty about the global economy, the results of a quarterly government
survey released Monday show.
The index is computed by subtracting the percentage of large companies
reporting deteriorating business conditions from the percentage of companies
reporting an improvement. A positive figure indicates the majority of large
companies see an improvement.
Investors will continue monitoring developments in the political arena in
the selection of a successor to Bank of Japan governor Toshihiko Fukui, who
stepped down last Wednesday. The governorship is now vacant for the first time
since the end of the Second World War.
Masaaki Shirakawa, the newly-appointed deputy governor and acting governor
of the Bank of Japan, said late Friday that tackling financial market turmoil
caused by US credit problems is his priority.
"The top priority is to appropriately handle the nervous climate in the
global financial market triggered by the subprime loan issue," he told a press
conference.
At midday the yield on the benchmark 10-year bond was at 1.280 percent, up
from 1.270 percent late Friday.
The yield on the two-year note rose to 0.570 percent from 0.565 percent and
the yield on the five-year note inched up to 0.780 percent from 0.775 percent.
The yield on the 20-year bond dipped to 2.020 percent from 2.030 percent.
There were no transactions in the 30-year bond.
Bond prices move inversely to yields.
The price of the June futures contract for the 10-year bond edged down to
140.62 yen from 140.90 yen late Friday.
(1 US dollar = 99.72 yen)
yumiko.nishitani@thomson.com
yun/jm
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