TOKYO, April 23 (Reuters) – Japan’s Nikkei average steadied
on Monday, giving up earlier gains as a report that the Bank of
Japan would extend the maturity of bonds it purchased prompted
investors to sell index futures and buy five-year Japanese
government bonds.
“The JGB story is leading the futures flow in the Nikkei.
Some of the CTAs basically are buying JGBs and selling futures,”
a senior dealer at a foreign bank said, referring to an Asahi
Shimbun newspaper report.
CTA stands for commodity trading advisers and refers to
hedge funds that bet on futures.
The Asahi newspaper said the BOJ was considering expanding
the target of its asset purchase programme to bonds with
maturities of up to five years from two years.
The BOJ is due to meet on Friday and market consensus is
that it will ease policy further by expanding its 65 trillion
yen ($796.5 billion) asset-buying and loan programme by 5
trillion or 10 trillion yen, with the increase to be used to buy
government bonds.
The Nikkei was flat at 9,562.80 after trading as
high as 9,643.27 earlier in the session as a pledge to raise the
size of the International Monetary Fund’s debt crisis rescue
fund lifted sentiment.
The broader Topix index was down 0.2 percent at
810.83, while yields on the five-year JGB eased 1.5
basis points to 0.265 percent, their lowest level since October
2010.
Leading world economies on Friday pledged $430 billion in
new funding for the IMF, more than doubling its lending power in
a bid to protect the global economy from the euro zone debt
crisis.
Mitsui Chemicals Inc shed 5.4 percent after the
company said there had been an explosion and fire at a glue
factory, killing one employee and injuring some 20 workers and
nearby residents.
Sumitomo Chemical Co Ltd rose 0.6 percent, with a
trader saying that it makes a similar product, which is used for
making tyres, and may see a revenue increase.
Corporate activity news boosted Yakult Honsha Co Ltd
, which jumped 12.1 percent after Kyodo News said French
food firm Danone may increase its stake in the
Japanese drink maker to 28 percent from 20 percent.
