TOKYO: Japanese government bonds gained on Wednesday, with the benchmark yield retracing last week's three-month low as a stronger yen and concerns about emerging markets helped push stocks into negative territory.
"JGBs were mostly flat, but got a little lift as stocks suddenly turned lower, but moves are limited as everyone waits for fresh trading factors," said a fixed-income fund manager at a European asset management firm in Tokyo.
The yield on the benchmark 10-year JGB gave up one basis point to 0.730 percent, matching last week's low. It earlier rose to 0.745 percent.
Ten-year JGB futures ended morning trade up 0.15 point at their session high of 144.14, after dropping as low as 143.97 earlier.
The Nikkei stock average erased early gains and shed 0.8 percent, as the dollar also gave up early gains against the Japanese currency to drop 0.1 percent.
In recent sessions, equity markets as well as emerging markets currencies have been pressured by fears that the US Federal Reserve will start tapering its monetary stimulus as early as next month, drawing more capital out of Asia.
Investors awaited the minutes of the Fed's July policy meeting, scheduled to be released later in the session, for potential clues as to the timing of the stimulus reduction.
The Bank of Japan's regular operations also lent support to the JGB market. The BOJ offered to buy outright up to 450 billion yen of JGBs with residual maturity of between five and 10 years, and an additional 200 billion yen of JGBs maturing in more than 10 years.
BoJ Governor Haruhiko Kuroda said he won't hesitate to provide further monetary stimulus if downside risks from a planned sales tax hike or overseas economies increase, according to an interview in the Mainichi newspaper on Wednesday.
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