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JGBs close higher

but move narrowly

TOKYO: Key December Japanese government bond (JGB) futures inched up by Tokyo close, but the market lacked direction throughout the day, traders said.

Slight weakness in the cash prices capped the futurs' prices, while operators were unwilling to sell aggressively due to a lack of convincing selling incentives, traders said.

The market factored-in the results of the 10-year auction and leading indicators for June because they were in line with the market expectations, traders said.

The December ended at 116.42 from Monday's 116.40. It moved in a range of 116.07-116.44, with volume of 48,908 contracts.

"The result of the auction was pretty much in line with market expectations," said a trust bank trader. "We have to see whether investors' demand will be strong, while it seems that city banks were not aggressive bidders at the auction today."

Results of the 3.3 percent 10-year bond auction produced a lowest price of 100.20 and an average price of 100.27.

"Some focus was on the leading indicators, but they were not enough to drive the market sharply," the trader said.

Japan's diffusion index of leading economic indicators stood at 9.1 on a scale of 100 in June, the Economic Planning Agency (EPA) said.

In the morning, dealers hedge-related sales weighed heavily on the JGB futures, but the yen's firmness provided firm support throughout the day, traders said.

Traders said the market was focusing on the US Federal Reserve's Federal Open Market Committee (FOMC) meeting scheduled for later today.

"The market is not expecting the Fed to ease its rate at the FOMC meeting today," a commercial bank's securities arm trader said. "But if the Fed decides to ease, then that will have a great impact and could lift the JGB prices sharply."

The yield of the key 174th 10-year cash bond stood at 3.190 percent at 0722 GMT against a 3.195 percent close on Monday. It moved in a range of 3.190 to 3.255 percent.-Reuter