JGBs mostly down on Greece hopes

TOKYO: Japanese government bond prices were mostly lower on Monday as the safe-haven appeal of fixed-income assets faded ahead of European finance ministers' expected approval of a Greek bailout, as well as China's weekend decision to ease policy by cutting banks' reserve rate requirements.

Euro zone finance ministers are expected to approve a 130 billion euro ($171 billion) rescue programme for Greece at a meeting on Monday.

The Nikkei share average was up more than 1 percent, breaking above 9,500 for the first time since early August, on the prospect of a deal for Athens and the step by China.

Sentiment in the JGB market deteriorated as investors expected a recent rally in Tokyo share prices to continue and concerns about the European debt crisis subsided, a Reuters weekly survey showed on Monday.

The latest poll's JGB bull-bear diffusion index, calculated by subtracting the number of bearish market players from those that are bullish, turned negative for the first time in three weeks, skidding to minus 26 from plus 6 in the previous survey.

But not all investors polled were negative on bonds after the Bank of Japan unexpectedly eased policy on Tuesday by saying it would spend an extra 10 trillion yen on JGBs as part of its asset-buying programme.

"The BOJ's decision has changed market sentiment completely. Fundamentally, the yield curve will be pressured from the short-end. I expect the 10-year yield to fall to its low for the year of 0.935," said Kazuhiko Sano, a strategist at Tokai Tokyo Securities, in the poll.

The yield on 10-year JGBs added half a basis point to 0.950 percent, while 10-year JGB futures edged down 0.05 point to 142.70.

The five-year yield added half a basis point to 0.300 percent, recovering from its six-month low of 0.295 percent.

But superlong bonds pared earlier losses and were steady, with the 30-year yield flat at 1.900 percent after earlier rising to 1.910 percent, while the 20-year yield was also flat at 1.720 percent after a climb to 1.1725 percent.