TOKYO: Japanese government bond prices edged down on Wednesday as a better-than-expected Spanish debt auction and positive housing data in the United States lifted global shares and dampened demand for safe-haven debt.
But any losses in JGBs were likely to be limited, as buyers were expected to emerge on dips, with many investors keen to reinvest money after large-scale bond redemptions this month, market players said.
JGBs are also expected to be underpinned by tight supply conditions as there will be no major bond auctions until January.
The 10-year cash bond yield edged up 0.5 basis point to 0.980 percent, but stayed near a three-week low of 0.965 percent hit this week.
March 10-year JGB futures were down 0.02 point at 142.31, after falling to a one-week trough of 142.20, 0.13 point lower. Futures have consistently failed to stay near the lower-end of their Ichimoku cloud at 142.52, which is seen as major technical resistance.
The Bank of Japan is expected to keep policy on hold at its two-day policy meeting, with its interest rate decision coming at 12:30-14:00
Market reaction was limited after the finance ministry's November trade balance data showed a deficit of 684.7 billion yen ($8.8 billion), bigger than forecast and the second straight month in the red.
But some market players said JGBs' safe-haven status may be called into question in the long run if Japan's current account balance falls into deficit as well.
In Europe, Italian and Spanish bond yields fell, while Germany's business sentiment index saw a sharp increase in December, underscoring the resilience of the region's powerhouse economy.
Wall Street surged nearly 3 percent overnight after US housing starts and permits for future construction climbed to a 1-1/2 year high in November, reinforcing the view that the US economy will continue to see moderate growth.
The Nikkei share average gained 1.4 percent on Wednesday.
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