Japan's super-long bonds rise after heavy selloff

By Junko Fujita

TOKYO, July 16 (Reuters) - Japan's super-long government bonds rose on Wednesday, as investors bought back the bonds after a heavy selloff this week.

The 40-year JGB yield JP40YTN=JBTC fell 8 basis points to 3.4%. The 30-year JGB yield JP30YTN=JBTC fell 2.5 bps to 3.135%.

Yields move inversely to prices.

The 30-year bond yield hit a record high in the previous session amid concerns about the nation's fiscal health ahead of a closely-monitored upper house election at the end of this week.

The market weighed the risk of the defeat of the Liberal Democratic Party and its coalition partner Komeito, as a potential defeat could empower opposition parties, which are seeking to cut or abolish the sales tax.

"The market has priced in the defeat of the LDP coalition and the expansion of Japan's spending," said Takashi Fujiwara, chief fund manager at Resona Asset Management's fixed income investment division.

"So from now until the end of the week, investors may start buying the bonds to cover short positions. The 30-year bond yield may not rise further from the current level of about 3.1%," he said.

The 20-year JGBs JP20YTN=JBTC have not been traded yet, after the yield rose to its highest since November 1999 on Tuesday.

The 10-year JGB yield JP10YTN=JBTC rose to as high as 1.595%, and was last flat at 1.585%.

The two-year JGB yield JP2YTN=JBTC was flat at 0.785% and the five-year yield JP5YTN=JBTC rose 1.5 bps to 1.095%.