TOKYO: Japanese government bonds edged lower on Wednesday as buoyant stocks undermined bond market sentiment.
The Nikkei stock index climbed 1.6 percent to its highest close since April 27 as the yen weakened and as upbeat U.S. data suggested the economy may be resilient enough to absorb an interest rate hike expected as soon as June.
Investors were also wary of taking aggressive positions ahead of a two-day Group of 7 leaders' summit in Japan that begins on Thursday.
In the week after the summit, the Japanese government is widely expected to clarify whether it will proceed with a sales tax hike in April, or confirm widespread expectations that it will delay it to avoid a shock to the ailing economy.
Japanese Finance Minister Taro Aso said on Wednesday he told his G7 counterparts at a finance leaders' meeting last week that his country will proceed with the scheduled sales tax hike next year.
But he sidestepped a question in parliament from an opposition lawmaker on whether that meant Japan has officially pledged to the international community that it will go ahead with the increase.
The benchmark 10-year JGB rose 1 basis point to minus 0.100 percent, while June 10-year futures ended down 0.05 point at 151.74.
The 30-year JGB yield added 1 basis points to 0.340 percent .
Japan's Ministry of Finance will auction 400 billion yen ($3.64 billion)of 40-year JGBs on Thursday.
Earlier on Wednesday, the Bank of Japan offered to buy 350 billion yen of JGBs in the 1- to 3-year zone, 440 billion yen of JGBs in the 3- to 5-year zone, and 450 billion yen of JGBs in the 5- to 10-year zone under its asset buying programme.
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