Japanese government bond futures dipped for a sixth straight session on Wednesday, erasing early gains after a Bank of Japan Policy Board member said the central bank was "very close" to ending its super-loose monetary policy.
The comments from BoJ Deputy Governor Kazumasa Iwata - widely seen as the most dovish member of the board - also sent benchmark euroyen futures to their lowest since February 2001, a month before the BoJ launched its "quantitative easing" policy.
"We're starting to hear a very hawkish tone from BoJ officials," said Tetsuya Miura, bond strategist at Shinko Securities.
"It all suggests there's a growing risk that quantitative easing will end earlier than the market had expected," he said.
The comments added to speculation the BoJ was preparing the market for an end to quantitative easing, which has kept short-term rates anchored near zero for more than four years in an attempt to kick-start the economy and help ease deflation.
December 10-year futures slipped 0.07 point to 139.14, having touched a three-week low of 138.72.
They tumbled from near a morning high of 139.44 after the comments by Iwata, who was speaking in English at a conference organised by the Cabinet Office's research arm.
Benchmark 10-year yields shot up as much as 3.5 basis points to 1.4 percent, the highest in three weeks. They later retreated to 1.360 percent, down 0.5 basis point on the day.
The two-year yield rose 0.5 basis point to 0.170 percent, while the five-year yield climbed two basis points to 0.635 percent.
BoJ Policy Board member Toshikatsu Fukuma, also speaking on Wednesday, said the central bank should implement any policy shift gradually so as to see how financial markets reacted.
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