TOKYO: Japanese government bond prices gained on Wednesday on hopes that the Bank of Japan may take new easing steps later in the week and on worries about whether the euro zone would take decisive steps to resolve its debt crisis.
The Bank of Japan will consider expanding its asset buying scheme by 5 trillion yen, the Nikkei business daily reported on Wednesday. Sources told Reuters the BoJ will likely debate easing policy at a meeting on Thursday.
The market also got a lift on worries over the European Union summit on Wednesday as prospects for a comprehensive deal to resolve the debt crisis dimmed, with deep disagreement remaining on critical aspects of the potential agreement, including how to give the region's bailout fund greater firepower.
Ten-year Japanese government bond futures gained 0.28 point to 142.58 while the yield on the cash 10-year JGBs fell 2 basis points to 0.995 percent, its lowest in about two weeks.
Euroyen three-month interest rate futures also edged up on hopes of BoJ easing hopes.
The Finance Ministry raised the coupon rate on the two-year notes it will sell on Wednesday to 0.2 percent from 0.1 percent in its previous two issues. The auction is expected to draw solid demand from banks and foreign investors.
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