TOKYO, Feb 12 (Reuters) - Yields on longer-dated Japanese government bonds pulled back from two-year lows on Tuesday after the Bank of Japan trimmed the amount of debt it offered to buy at a regular market operation.
A surge in Tokyo shares, which gained 2 percent, also weighed on JGB prices, pushing up their yields.
The BOJ on Tuesday offered to buy 180 billion yen ($1.63 billion) of 10- to 25-year JGBs, down from 200 billion yen at the previous operation last week.
The central bank often tweaks the amount of JGBs it purchases at its regular operations as part of its yield curve-controlling scheme.
Tuesday’s reduction in the purchase amount of longer-dated JGBs came in the wake of the recent flattening of the yield curve, led by declines in the yields of longer-dated JGBs.
Longer-dated JGBs such as 20- and 30-year bonds have found steady investor demand recently as they still offer yields above zero percent, compared to shorter maturities like the benchmark 10-year that have seen their yields fall into the negative territory.
“The bond market was not expecting the BOJ to reduce its market operation purchasing amount. The central bank appears poised to trim its bond buying going forward,” said Katsutoshi Inadome, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
“Such a stance by the BOJ will likely help arrest the decline in JGB yields.”
The 30-year JGB yield was up 1.5 basis points at 0.595 percent. The yield had sunk to 0.575 percent on Friday, its lowest since December 2016.
The 20-year yield also rose 1.5 basis points to 0.420 percent following its descent to 0.400 percent on Friday, its lowest since November 2016.
The 10-year yield rose half a basis point to minus 0.025 percent. ($1 = 110.4300 yen) (Reporting by the Tokyo markets team; Editing by Shreejay Sinha)