Oct. 14 (Bloomberg) -- Japan’s 10-year bonds may gain for the first time in a week on speculation yields near the highest this month will lure investors as the Bank of Japan concludes its two-day policy meeting today.

All 20 economists surveyed by Bloomberg News expect policy makers to keep the benchmark interest rate on hold at 0.1 percent, which is 0.15 percentage point below two-year yields. BOJ Governor Masaaki Shirakawa and his colleagues may say they will let their corporate debt purchase programs expire Dec. 31 as scheduled. Demand for government debt may also increase after U.S. Treasuries rose yesterday for the first time in three days.

“Investors will probably buy on dips as the environment has improved for bonds,” said Kazuhiko Sano, chief strategist in Tokyo at Citigroup Global Markets Japan Inc., one of 23 primary dealers required to bid at bond auctions. “Although the BOJ’s corporate support program will be eventually ended, it may not be decided at today’s meeting.”

Ten-year bond futures for December delivery added 0.10 to 139.19 as of 9:01 a.m. at the Tokyo Stock Exchange.

The benchmark 10-year bond hasn’t traded yet today at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The yield on the 1.3 percent bond due in September 2019 increased 1.5 basis points, or 0.015 percentage point, to 1.295 percent yesterday. Yields reached 1.3 percent yesterday, the highest level since Sept. 25. Ten-year yields may fall to 1.28 percent today, Citigroup’s Sano said.

Since lowering rates to 0.1 percent in December, the Bank of Japan started buying commercial paper and corporate bonds from lenders and offering them unlimited loans backed by collateral to channel funds to companies. The policy board in July extended those steps to Dec. 31.

Ten-year U.S. yields fell three basis points yesterday to 3.35 percent, narrowing the premium over similar-dated Japanese debt to 2.05 percentage points, according to data compiled by Bloomberg. The gap is likely to expand to 2.14 percentage points by the end of the year, a weighted survey of analysts and economists shows.

To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.

Last Updated: October 13, 2009 20:19 EDT