TOKYO: Japanese government bonds were on track for their third straight session of gains on Tuesday, boosted by deepening doubts European countries such as Spain and Italy can fund their debt.
The outcome of Sunday's Greek election removed some of the fear that country would be forced out of the euro zone, but rising yields in other nations kept alive concerns on debt contagion and underlined the need for more rescue steps.
Yields on both Italian and Spanish bonds rose overnight, with Spain's 10-year yield climbing above the 7-percent mark at which other European countries were forced to seek bailouts.
Trading was relatively thin as investors awaited the US Federal Reserve's latest interest rate decision. They are looking to see whether the central bank will opt to take more monetary stimulus steps - or signal that more are imminent - at its regular two-day policy meeting, beginning later on Tuesday.
Wednesday's quarterly JGB redemptions also continued to support demand, traders said.
"Some funds have held off, hoping to buy at better levels, but it now looks as if the 10-year yield might test resistance at 0.80 percent before it tests 0.90 percent support," said a fixed-income fund manager at a Japanese asset management firm.
A rise in German bond prices overnight was also viewed as favourable to JGB market sentiment. In the cash market, 10-year yields on rose 9 basis points to briefly hit 1.544 percent, their highest since mid-May.
The 10-year JGB yield slipped 1.5 basis points to 0.820 percent, bringing it to just 3 basis points above its 9-year low of 0.790 percent marked on June 4.
The 10-year JGB futures contract for September ended morning trade up 0.16 point at 143.80.
The 20-year yield fell 1.5 basis point to 1.645 percent, while the 30-year yield shed 1 basis point to 1.840 percent.
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