JGB yields fall, futures rise as BOJ keeps bond buying steady

(Updates prices as of 0800 GMT after BOJ governor's news conference)

By Kevin Buckland

TOKYO, April 26 (Reuters) - Japanese government bond futures rose in extended trading while bond yields declined and the yen plumbed fresh 34-year lows on Friday after the Bank of Japan confirmed that its bond purchase amounts would remain unchanged for now.

Investors had been primed for a tapering of bond buying by the central bank after Jiji news agency reported overnight that policymakers would consider measures to reduce purchases at the two-day policy meeting that concluded in the early Tokyo afternoon.

In the end the BOJ kept its target rate unchanged as expected but issued a simplified statement that removed a reference to buying JGBs at a pace of about 6 trillion yen ($38.3 billion) per month, leaving some doubts in market participants' minds about the fate of the bond-purchase program.

BOJ Governor Kazuo Ueda made it clear in his evening news conference though that the status quo would be maintained.

"There's no change from March," he said. "There was no opposition from the board today on continuing to buy at the current pace of roughly 6 trillion yen per month."

Benchmark 10-year JGB futures rose 0.46 to 144.39 as of 0800 GMT, after slipping 0.22 at the end of the regular session.

The five-year JGB yield sank 1.5 basis points (bps) to 0.48%, after earlier touching the highest since April 2011 at 0.52%.

The 20-year JGB yield dropped 1.5 bps to 1.645% after earlier climbing to 1.7%, a nearly six-month peak.

The two-year note hadn't traded following Ueda's news conference, but had declined 0.5 bp to 0.295% following the policy decision, after earlier climbing to 0.315% for the first time since July 2009.

The dollar spiked as much as 0.76% to reach 156.825 yen as Ueda spoke. It later tumbled briefly before climbing back to around 156.5, with traders unsure whether the momentary drop was due to intervention.

The failure of the BOJ to lay out a plan for so-called quantitative tightening (QT) left the market "with a bit of a surprise," so "it was natural" for bonds to be bought back, said Naka Matsuzawa, chief Japan macro strategist at Nomura Securities.

"At the very least, the amendments made to the statement at this meeting cannot be called a declaration to start reducing government bond purchases."

Other JGB tenors also hadn't traded following Ueda's news conference, but the 10-year JGB yield had pared an early rise to 0.93%, the highest since Nov. 3, to last change hands at 0.925%.

The 30-year yield was 1 bp higher at 1.96%. ($1 = 156.5600 yen)

(Reporting by Kevin Buckland, Junko Fujita and Brigid Riley; Additional reporting by Tom Westbrook; Editing by Vidya Ranganathan, Janane Venkatraman and Hugh Lawson)