BOJ deploys funds-supply tool again as yields creep up

TOKYO (Reuters) - The Bank of Japan said on Friday it will extend five-year loans against collateral to financial institutions, the second time it has made such an offer after ramping up the funds-supply operation this month as a tool to defend its yield control policy.

The central bank will conduct the funds-supply operation on Tuesday, under which it will offer loans with a five-year duration from Feb. 1, according to a statement.

The amount of loans to be offered will be announced on Tuesday, it added.

The announcement came after the 10-year Japanese government bond (JGB) yield crept up near the BOJ's 0.5% cap on Friday, partly on data showing core consumer inflation in Japan's capital Tokyo hit a near 42-year high of 4.3% in January.

(Reporting by Leika Kihara; Editing by Jacqueline Wong)