TOKYO: Japanese government bonds were firm in thin trade on Friday as market players were cautious about shifting positions amid uncertainty over developments in Greece and ahead of US jobs data, keeping the 10-year yield below 1 percent.
Greece's abrupt call for a referendum on its bailout package, just days after a deal was struck to save the debt-stricken country from defaulting, sparked panic in global financial markets earlier this week, prompting EU leaders to talk of a possible Greek exit from the euro to preserve the single currency.
Greek Prime Minister George Papandreou faces a knife-edge confidence vote on Friday after his plan for the referendum backfired disastrously.
Risk assets such as stocks steadied on Friday on hopes Greece will abandon the proposed referendum, but market participants remained cautious ahead of the confidence vote in the Greek parliament.
"Even if market sentiment becomes somewhat 'risk-on', 10-year JGB yields are unlikely to rise as high as 1.5 percent because the situation in Europe will hurt the global economy over the long term, including the Japanese economy," said Jun Fukashiro, chief fund manager at Toyota Asset Management.
The 10-year JGB yield was flat at 0.990 percent, off a two-month high of 1.045 percent marked on Monday. The five-year yield edged down 0.5 basis point to 0.345 percent, its lowest in a week.
Superlongs such as 20- and 30-year bonds outperformed with the 20-year yield declining 1.5 basis points to 1.720 percent, marking a three-week low. Buying from investors such as Japanese banks, albeit in small lots, likely underpinned the maturity, players said.
Lead 10-year JGB futures edged up 0.06 point to 142.64, despite a rise in Tokyo stocks and fall in US bond prices.
US Treasury debt prices fell on Thursday after a rate cut by the European Central Bank and a drop in US jobless claims helped feed a bid for riskier assets and drained demand for safe-haven government debt.
The Nikkei share average rose over 1 percent on Friday.
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