Wires

JGBs supported by concerns over slowing global growth

TOKYO, Oct 9 (Reuters) - Japanese government bonds weresteady on Tuesday, as heightened worries about slowing globalgrowth and sagging stocks supported demand for fixed incomeassets.

* The International Monetary Fund cut its global growthforecast on Tuesday to a 3.3 percent expansion for 2012, downfrom its July estimate of 3.5 percent, and warned of a prolongedslump if U.S. and European policymakers fail to address theireconomic problems.

The IMF also said on Tuesday China's economic growth isexpected to weaken to 7.8 percent this year.

* JGBs initially weakened, with futures opening lower, aftera sell-off in U.S. Treasuries on Friday after upbeat U.S.employment data. The U.S. Labor Department said the unemploymentrate fell to a four-year low of 7.8 percent in September, downfrom 8.1 percent in August, as 114,000 jobs were added.

Both U.S. and Japanese bond markets were closed on Mondayfor respective holidays.

* "Investors who were hoping to buy on a dip today afterFriday's U.S. employment data were disappointed, when thatsell-off failed to emerge," said a fixed-income fund manager ata Japanese trust bank.

"There are still people who want to buy, but the time is notnow," he said.

* The Nikkei share average fell 0.3 percent.

* The 10-year yield was flat at 0.775 percentafter earlier rising to 0.780 percent. Benchmark yields hit aneight-week low of 0.755 percent last week.

* Ten-year JGB futures ended the morning session up0.01 point at 144.11, after falling as low as 144.03.

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

* Yields on 20-year bonds were flat at 1.660percent, while those on 30-year debt added half abasis point to 1.925 percent.

* A gauge of sentiment in the Japanese government bondmarket has gone deeper into negative territory, though investorsexpect buying at the beginning of the second half of the fiscalyear to keep yields from rising far from recent ranges, a weeklyThomson Reuters survey showed on Tuesday.

* In recent weeks, some investors have built up longpositions in the 10-year tenor, which could be setting the stagefor a correction, some strategists said.

"If there is a rise in overseas yields on top of such adomestic build-up in excess long positions, there could be atemporary surge in yields," said Barclays strategist NoriatsuTanji in a note to clients.

"We still expect yields to stay in a range around 0.8percent for now due to domestic demand factors, but also see agradually increasing risk that they will rise," Tanji said.

(Reporting by Lisa Twaronite; Editing by Jacqueline Wong)

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

Keywords: MARKETS JAPAN JGB/