April 4 (Bloomberg) -- Japan's 10-year bonds may rise after a report showed job growth in the U.S. slowed last month, fueling speculation exports to Asia's biggest overseas market will decline and weaken the economy.

Ten-year bonds had a fourth week of gains on signs Japan's economy is struggling to recover from its fourth recession since 1991. Reports last week showed industrial production fell, household spending dropped, and the central bank's Tankan index on business confidence unexpectedly declined to the lowest in a year. Exports account for about a 10th of Japan's economy.

``Bonds may edge higher this week,'' said Makoto Yamashita, a Tokyo-based economic strategist at UFJ Tsubasa Securities Co., one of the 28 primary dealers invited to discuss bond sales with the Ministry of Finance. ``Expectations about faster growth have receded and the consensus view among investors is Japan's economy is in a plateau.''

Ten-year bond futures for June delivery traded at 139.36 on the London International Financial Futures Exchange on April 1 compared with 139.43 at the 3 p.m. close in Tokyo. The contract will open for trading at 9 a.m. Tokyo time.

The 1.5 percent bond due March 2015 fell 0.134 to 101.449 on April 1, according to Japan Bond Trading Co., the nation's largest debt broker. Its yield rose 1.5 basis points to 1.335 percent after falling to 1.315 percent, the lowest for a 10-year bond since Feb. 8. A basis point is 0.01 percentage point.

Ten-year yields may fall as low as 1.28 percent this week, Yamashita said.

U.S. employers added 110,000 workers in March, the fewest since July and barely half the number expected, a government report showed on April 1. The median forecast of 78 economists surveyed by Bloomberg News was for an increase of 213,000.

Japan sent about a fifth of its exports to the U.S. last year. Exports grew 1.7 percent in February from a year earlier, the smallest increase in 15 months, the Ministry of Finance said on March 23.

The No. 268 bond with a 1.5 percent coupon due in March 2015 closed at 101.49 to yield 1.33 percent on April 1, according to the Bloomberg Yen Bond Fixing Price. The level is an average rate set at 6:30 p.m. in Tokyo by Daiwa Securities SMBC Co., Nikko Citigroup Ltd., Mizuho Securities Co. and Mitsubishi Securities Co.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net.

Last Updated: April 3, 2005 18:28 EDT