JGBs mostly firm on coronavirus fears, curve steepens

TOKYO, Jan 31 (Reuters) - Short- to medium-term Japanese government bond prices gained on Friday as concerns about a widening outbreak of the coronavirus that originated in China kept their safe-haven allure.

But longer-dated bonds gave in to profit-taking as domestic stock prices rebounded, resulting in a steepening of the yield curve.

Benchmark 10-year JGB futures rose 0.09 point to 152.86 while the yield on the benchmark 10-year cash JGBs fell 0.5 basis point to minus 0.065%, the lowest level in almost two months.

The five-year JGB yield fell 1 basis point to minus 0.165%, also hitting a two-month low, while the two-year yield fell 1 basis point to minus 0.160%.

Short-term paper was also helped by firm results of the two-year JGB auction on Thursday.

On the other hand, long-dated bonds stepped back from recent rallies as stock prices bounced back on strong earnings from some Japanese companies.

The 20-year JGB yield rose 0.5 basis point to 0.230%, while the 30-year JGB yield rose 1 basis point to 0.365%.

However, on a monthly basis, the 20-year yield posted its first fall in five months. (Reporting by Tokyo Markets Team; Editing by Aditya Soni)