JGBs fall ahead of auction; increased risk appetite weighs on bonds

TOKYO, June 30 (Reuters) - Japanese government bonds fell on Monday as investors were cautious ahead of auctions, and the increased risk appetite prompted the sale of safe-haven assets such as bonds.

The two-year JGB yield JP2YTN=JBTC rose 1 basis point (bp) to 0.75% and the five-year bond yield JP5YTN=JBTC inched up 0.5 bp to 0.98%.

The 10-year JGB yield JP10YTN=JBTC rose to as high as 1.445% before trading flat at 1.430%.

Bond yields move inversely to prices.

"The market is cautious ahead of the auctions for 10-year and 30-year bonds this week," said Naoya Hasegawa, senior bond strategist at Okasan Securities.

The Ministry of Finance will sell 10-year bonds on Tuesday and 30-year bonds on Thursday.

Hasegawa said the outcome of the 10-year auction is expected to be moderately firm, with yields across the curve relatively low as expectations of a Bank of Japan interest hike remain weak.

"And yields on super-long bonds have stabilised after the finance ministry's announcement to reduce the issuance of such bonds. It has made it easier for investors to buy bonds and pushed down the curve," Hasegawa said.

Japan's Nikkei index .N225 touched a more than 11-year high earlier in the session on Monday as investors' risk appetite was boosted after a rally in U.S. equities on Friday.

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The 20-year JGB yield JP20YTN=JBTC rose 1.5 bps to 2.345%. The 30-year JGB yield JP30YTN=JBTC rose 1 bp to 2.915%.

The 40-year JGB yield JP40YTN=JBTC rose 0.5 bp to 3.09%.