Japanese government bonds edged higher on Friday, after US Treasuries climbed the previous day on nagging concerns about deteriorating credit conditions.
But gains in global share prices kept expectations that the Bank of Japan could raise interest rates to a 12-year high of 0.75 percent from current 0.5 percent as soon as this month, making investors careful about chasing JGBs aggressively.
Swap contracts on the overnight call rate show about a 60 percent chance of a BOJ rate rise this month, up from around 55 percent in late trade on Thursday.
A global sell-off in equity and credit markets in recent weeks has led investors to question whether the BOJ will raise interest rates this month, boosting JGB futures to a two-month high.
September futures rose 0.08 point to 133.26, moving towards a two-month high of 133.59 struck earlier this week. The benchmark 10-year yield fell a basis point to 1.805 percent. It hit a two-month trough of 1.745 percent on Wednesday.
"The 10-year yield is currently at a level where market players feel comfortable, while the BOJ may or may not raise interest rates this month," said Naomi Hasegawa, a senior fixed-income strategist at Mitsubishi UFJ Securities. The five-year yield was unchanged on the day at 1.360 percent.
The Nikkei share average was up 0.3 percent in early trade, tracking an overnight rise on Wall Street.
Caution ahead of high-profile US employment data at 1230 GMT also kept investors reluctant to move as the jobs report will provide clues about the state of the world's largest economy and the future path of the Federal Reserve's monetary policy. US Treasuries rose the previous day as lingering concerns about worsening credit conditions drove investors to the relative safety of bonds.