Japan's 30-year bond yield rises amid concerns about weak demand

TOKYO, May 14 (Reuters) - Japan's 30-year government bond (JGB) yield rose on Wednesday after investors sold the bonds to book profits amid concerns about weak demand for the super-long bonds.

The 30-year JGB yield JP30YTN=JBTC rose 3.5 basis points (bps) to 2.91%, reversing the early declines.

Earlier in the day, investors bought the 30-year bonds following a better-than-expected auction outcome on Tuesday.

However, a handful of investors sold them probably to book profits, said Miki Den, a senior Japan rate strategist at SMBC Nikko Securities.

Demand for the 30-year bonds is weak as most life insurers, major investors in super-long bonds, have already completed their asset-liability duration matching to comply with the Financial Services Agency's regulations.

"But the new issue of the 30-year bonds by the Ministry of Finance remains the same this fiscal year. That also hurt the demand for the bonds," said Den.

The gap between the 10-year JGB yield and the 30-year bonds JP10JP30=RR hovered at a record level, signalling ongoing concerns about demand, Den said.

The finance ministry's auction for the 30-year bonds in the previous session was better than expected, with the lowest bid price within the market expectations, said strategists.

The 10-year JGB yield JP10YTN=JBTC inched up 0.5 bp to 1.45%. The 20-year JGB yield JP20YTN=JBTC rose 1.5 bp to 2.355%.

The yields on shorter-dated bonds fell, with the two-year JGB yield JP2YTN=JBTC down 0.5 bp to 0.71%. The five-year yield JP5YTN=JBTC fell 1.5 bps to 0.965%.