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Long-dated JGBs bounce back on policy hopes

TOKYO, Aug 31 (Reuters) - Long-dated Japanese government bond prices edged higher on Monday, as investors bought back bonds on hopes that Prime Minister Shinzo Abe’s successor will stay the course on current fiscal and monetary stimulus policies.

On Friday, JGBs had slipped after news of Abe’s resignation raised concerns that the Bank of Japan could review its massive monetary easing policy, as the market has been supported in large part by the BOJ’s massive bond buying.

“However, during the weekend, market participants calmed down as they digested headlines related to possible successors and that monetary policy won’t be tightened abruptly,” said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.

Benchmark 10-year JGB futures rose 0.17 point to 151.59, with a trading volume of 22,601 lots, while the 10-year JGB yield fell 1 basis point to 0.045%.

In the super-long zone, the 20-year JGB yield fell 1.5 basis points to 0.420%, while the 30-year JGB yield and the 40-year JGB yield also dropped 1.5 basis points each to 0.605% and 0.630%, respectively.

At the shorter end of the market, the two-year JGB yield and the five-year yield stood unchanged at minus 0.115% and minus 0.070%, respectively.

The BOJ maintained the size of its bond purchase in its operation on Monday, buying 420 billion yen of 1-3 year JGBs and 350 billion yen of 3-5 year bonds. (Reporting by Eimi Yamamitsu; Editing by Jacqueline Wong)