Japan’s Bonds Advance for 1st Time in 4 Days as Stocks Decline

Japan’s 10-year bonds rose for the first time in four days as stocks around the world declined on speculation European’s debt crisis will worsen, boosting demand for the relative safety of government debt.

The Ministry of Finance sold 2.2 trillion yen ($28.1 billion) in 10-year debt today, drawing bids worth 3.26 times the amount on offer, the most since April. Bonds also advanced after a report showed a Chinese manufacturing index dropped last month to the lowest level since February 2009.

“The auction was better than expected despite an uncertain yield outlook, so bonds are being bought back,” said Makoto Yamashita, chief rate strategist in Tokyo at Deutsche Securities Inc., the brokerage unit of Deutsche Bank AG. “I’m closely watching if concerns about the sovereign-debt issues in Europe are going to recur in the markets.”

Ten-year yields fell two basis points to 1.025 percent as of 2:06 p.m. Tokyo time at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The 1 percent securities maturing in September 2021 climbed 0.178 yen to 99.775 yen.

Ten-year bond futures for December delivery gained 0.22 to 142.28 at the Tokyo Stock Exchange.

The Nikkei 225 (NKY) Stock Average lost 1.5 percent after the MSCI World Index slid 2.9 percent yesterday.

China’s Purchasing Managers’ Index fell to 50.4 from 51.2 in September, the China Federation of Logistics and Purchasing said in a statement today. That compared with the median estimate of 51.8 in a Bloomberg News survey of economists.

To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Yumi Ikeda in Tokyo at yikeda4@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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