July 30, 2010 – TOKYO, July 30 (Reuters) - Japanese government bond futures edged up on Friday after Japan's industrial output fell unexpectedly in a sign production is levelling out, but investor caution towards a 10-year debt auction next week limited gains.
* Sagging Tokyo stocks also supported JGBs.
* September 10-year futures climbed 0.06 point to 141.78, edging towards a seven-year high of 142.08 struck last week.
* Japan's Ministry of Finance will offer 2.2 trillion yen ($25.3 billion) of 10-year JGBs on Tuesday. JGBs have been rallying recently and market players were wary of driving prices too high and spoiling investor appetite for the new 10-year paper.
* The benchmark 10-year yield was unchanged at 1.075 percent after hitting a seven-year trough of 1.045 percent last week.
* Japan's industrial output fell 1.5 percent in June from the previous month against forecasts for a 0.2 percent rise, hinting that production is petering out as export growth moderates.
* Data released on Friday also showed that Japan's economy remained stuck in deflation, with June's core CPI falling 1.0 percent from a year earlier for its 16th straight month of decline.
* Tokyo's Nikkei fell 0.8 percent as technology shares were hit after weak outlooks from U.S. technology companies. (Reporting by Shinichi Saoshiro; Editing by Joseph Radford)
