Benchmark JGB yields fall most in more than 3 months as economic concerns mount

TOKYO, Aug 4 (Reuters) - Japanese government bonds surged on Monday, sending benchmark yields down by the most in more than three months, as concerns over the economic cost of a global trade war boosted demand for safer assets.

JGB yields followed a sharp decline in U.S. Treasury yields on Friday after data showed the world's largest economy created fewer jobs than expected, increasing odds of the Federal Reserve cutting interest rates at its September meeting.

And tariffs that U.S. President Donald Trump imposed last week on dozens of countries are likely to stay in place rather than be cut as part of continuing negotiations, Trade Representative Jamieson Greer said.

The 10-year JGB yield JP10YTN=JBTC fell 6.5 basis points (bps) to 1.485%, set for the sharpest one-day decline since April 16. The five-year yield JP5YTN=JBTC fell 7.5 bps to 1.005%.

"JGB yields are tracking declines of U.S. Treasury yields," said Keisuke Tsuruta, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities. "The declines in yields were also supported by expectations that the Bank of Japan may delay interest rate hikes due to a possible slowdown of the U.S. economy."

The U.S. Labor Department reported that the U.S. added 73,000 nonfarm payrolls last month, below economists' expectations for 110,000. June's job growth was revised sharply lower to 14,000 from 147,000.

Ahead of a Friday deadline, Trump set rates including a 35% duty on many goods from Canada, 50% for Brazil, 25% for India, 20% for Taiwan and 39% for Switzerland.

On Thursday, the BOJ kept its short-term rates steady at 0.5%, and subsequent comments by Governor Kazuo Ueda were seen as dovish, as he noted continuing risks to the economic outlook.