Japanese government bonds gained on Tuesday, supported by a rise in US Treasuries the previous day when worries over Greece's fiscal problems prompted investors to seek the safety of government debt. JGB futures pulled back from a four-month low struck the previous week, as investors including hedge funds covered some of their short positions in the wake of weaker Tokyo stocks, market players said.
But gains were limited as investors were reluctant to take fresh positions due to lingering supply worries and ahead of the March 31 fiscal year-end. The Japanese government will likely suffer a shortage of 6 trillion yen to 7 trillion yen ($67 billion to $78 billion) in funds to carry out its election pledges in the year to March 2012 and may need to issue additional bonds, the Nikkei business daily reported on Tuesday.