Japan's 10-Year Bonds Complete Weekly Gain on Slump in Stocks

Japan's 10-year bonds advanced, completing a weekly gain, after a slide in stocks drove demand for the relative safety of government debt.

Benchmark securities followed a rally yesterday in U.S. Treasuries, after analyst downgrades of Citigroup Inc. set off the steepest drop in U.S. financial companies in five years and a decline in Japanese shares. The U.S. economy may worsen, Bank of Japan Governor Toshihiko Fukui told lawmakers today in Tokyo.

``The market is having another bout of worry from the results of banks,'' said Patrice Conxicoeur, who oversees $5 billion in assets in Hong Kong as chief executive officer at Sinopia Asset Management (Asia Pacific) Ltd. There's a ``nice end-of-week correction and flight to quality.''

The yield on the 1.7 percent bond due September 2017 fell 7.5 basis points to 1.59 percent, the biggest decline since Sept. 10, at 4:51 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. Benchmark yields have dropped 3.5 basis points from last week.

Yields on five-year notes declined 8 basis points to 1.08 percent today, the largest slide since Aug. 17. A basis point is 0.01 percentage point.

Technical chart traders use to predict yield changes suggested the five-year notes fell too quickly yesterday and were poised to rise. The five-day relative strength index on five-year yields was 70 yesterday, compared with 33 on Oct. 31. A level above 70 suggests a bond's price may reverse direction.

Ten-year bond futures for December delivery rose 0.87 to 136.09 as of the afternoon close on the Tokyo Stock Exchange.

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