TOKYO—Japanese government bond yields rose, as investors locked in gains that last week sent the benchmark 10-year yield to a seven-year low.
The 10-year yield firmed 0.01 percentage point to 1.15%. Thursday, it had traded as low as 1.125%.
Some traders say prices could fall further, pushing up yields, as it remains uncertain whether the ruling Democratic Party of Japan can win enough seats in the July 11 upper house election. Yields had fallen amid hopes that Prime Minister Naoto Kan will raise the nation's 5% consumption tax rate to 10% to cut the country's budget deficit.
However, some analysts said the market will likely remain stable given that the outlook for the economy has become gloomier as risks grow that the yen will continue to rise given the euro-zone's sovereign debt problems, which will weigh on Tokyo shares.
The Bank of Japan's quarterly tankan survey us due Thursday, followed by the U.S. June jobs data on Friday. If both indicate that the recovery in the U.S. and Japan's economies is losing momentum, yields could fall again.
Write to Tomoyuki Tachikawa at tomoyuki.tachikawa@dowjones.com
