JGB market sentiment deteriorates further - Thomson Reuters survey

TOKYO, Oct 9 (Reuters) - A gauge of sentiment in theJapanese government bond market has gone deeper into negativeterritory, though investors expect buying at the beginning ofthe second half of the fiscal year to keep yields from risingfar from recent ranges, a weekly Thomson Reuters survey showedon Tuesday.

The weekly poll's JGB bull-bear diffusion index, calculatedby subtracting the number of bearish market players from thosethat are bullish, came in at minus 25, deteriorating from minus17 in last week's survey .

The survey found that 41.7 percent of total respondentsexpect JGB yields to trade sideways, up from 20.7 percent in theprevious poll. Another 41.7 percent of respondents foresee JGByields rising this week, down slightly from 48.3 percent in thelast survey.

The percentage of respondents expecting lower rates fell to16.7 percent from 31.0 in last week's poll.

The median forecast for the 10-year JGB yieldfor the end of this week was 0.785 percent, one basis pointabove Friday's closing level. Japanese markets were closed for anational holiday on Monday.

The online survey of 91 JGB market participants from majorinstitutions received 36 responses, for a response rate of 39.6percent. These included 14 responses from "real money" investorsfrom institutions such as banks, pension and investment fundsand insurance companies.

These "real money" investors were slightly less pessimisticthan other respondents, with their sentiment diffusion indexcoming in at minus 22 and their 10-year yield expectation at0.780 percent.

JGB sentiment weakened after a selloff in U.S. Treasuries onFriday after upbeat U.S. employment data. The U.S. LaborDepartment said the unemployment rate fell to a four-year low of7.8 percent in September, down from 8.1 percent in August, as114,000 jobs were added.

On the JGB supply-side, superlong maturities could facepressure ahead of the Ministry of Finance's 30-year bond sale onThursday.

The yield on the benchmark 10-year cash note added half abasis point on Tuesday to 0.780 percent, while the 10-year JGBfutures contract slipped 0.02 point to 144.08.

(JGB market participants interested in participating infuture surveys can contact yoshiyasu.shida@thomsonreuters.com.)

(Reporting by Yoshiyasu Shida; Writing by Lisa Twaronite;Editing by Joseph Radford)

((lisa.twaronite@thomsonreuters.com)(+81 3 6441 1870 ReutersMessaging: lisa.twaronite.thomsonreuters.com@reuters.net))