TOKYO, May 30 (Reuters) - Japanese government bonds were steady on Wednesday, as continuing fears about the euro zone’s debt woes supported demand, with the curve slightly flattening as the superlong sector inched higher.
* The benchmark 10-year JGB yield was flat at 0.845 percent, while the 10-year JGB futures contract ended morning trade up 0.04 points at 143.45.
* “Bonds are mostly in recent ranges today, with uneasiness about Europe keeping investors from selling, while buying interest is mostly in the recently oversold superlong sector,” said a fund manager at a Japanese asset management firm.
* Later Wednesday, the European Commission will set out its economic strategy for the euro zone, balancing growth with austerity steps.
* Fanning fears about some European countries’ ability to fund their debt, Egan-Jones Ratings cut Spain’s credit to B from BB-minus, the third downgrade from the agency in less than a month.
Spain will soon issue new bonds to fund its efforts to prop up its financial sector and regional economies, raising worries about whether it will be able to sustain its borrowing as costs rise.
* The 30-year bond yield fell 1 basis point to 1.790 percent, while the yield on the 20-year bond fell half a basis point to 1.640 percent
The spread between 10-year and 20-year yields narrowed to 79.5 basis points from a year high of 80.5 on a last-traded basis.
* Underpinning JGBs, Bank of Japan Deputy Governor Hirohide Yamaguchi said the central bank will not rule out further monetary easing if risks in Europe materialise and exert strong downward pressure on Japan’s economy, according to a report on Wednesday in the Nikkei business daily.
* Bank of Japan Governor Masaaki Shirakawa said on Wednesday that he disagreed with the view among some economists that Japan’s current account balance will turn into a deficit over time, and said the country will continue to run a current account surplus for the time being.