REPEAT:MNI POLICY: No BOJ Fixed-Rate Op; 10-Yr Yield Rise Mild

Repeats Story Initially Transmitted at 05:34 GMT Jul 27/01:34 EST Jul 27

     TOKYO (MNI) - The Bank of Japan on Friday refrained from conducting a

market operation to buy an unlimited amount of Japanese government bonds with a

remaining life of 5 to 10 years at a fixed-rate of 0.110% because today's rise

in the 10-year JGB yield to what is seen as the upper limit of its "around zero

percent" yield target was modest.

     On early Friday morning, the 10-bond yield rose to 0.100%, which was higher

than 0.090% on Monday (up 6 basis points from July 20's close), when the BOJ

conducted a fixed-rate operation at 0.110% to stop the bond yield from rising

further.

     On Monday, the BOJ's market operation team had to take action as the rise

in the 10-year bond yield was rapid amid speculation that the BOJ board would

announce measures to reduce the side-effects of large-scale easing at its July

30-31 meeting.

     Compared to this, the 10-year bond yield rose gradually on Friday. It

traded at 0.100%, unchanged from the level before 1010 JST (0010 GMT) when the

BOJ usually conducts market operations.

     If the 10-year bond yield continued rising further, it would prompt the BOJ

to announce a fixed-rate bond buying operation at or before 1400 JST (0500 GMT)

Friday.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com