TOKYO, Jan 4 (Reuters) - Japanese government bond (JGB) yields ticked higher on Thursday, catching up with a rise in U.S. Treasury yields as markets in the Asian nation reopened from an extended New Year holiday.
At the same time, expectations that a devastating earthquake on Japan's west coast would prevent an early end to the Bank of Japan's (BOJ) stimulus prevented JGB yields from rising too much.
The 10-year JGB yield was flat at 0.615% as of 0530 GMT, after starting the day by rising 1 basis point (bp).
The 30-year JGB yield rose 2 bps to a three-week high of 1.655%, while the 20-year yield added 1 bp to 1.390%, a more than two-week peak.
Although benchmark U.S. bond yields have retreated from multi-week highs above 4% reached earlier in the week, at around 3.93%, they stand well above the 3.83% level where they ended Tokyo's last trading day of 2023.
At the same time, analysts said the BOJ will need to monitor the fallout from the New Year's Day tremblor in Ishikawa prefecture, north-west of Tokyo, that killed at least 81 people and left tens of thousands homeless.
BOJ Governor Kazuo Ueda said on Thursday that the central bank will take necessary measures to maintain smooth funding and market function following the disaster. The next policy-setting meeting runs Jan. 22-Jan. 23.
"It is true that expectations for policy changes in January have now been wiped out, as it is highly likely that the BOJ will wait and see the impacts" of the quake, said Norihiro Yamaguchi, senior Japan economist at Oxford Economics, who expects a hawkish shift in April.
The two-year JGB yield increased 0.5 bp to 0.050%.
The five-year yield was flat at 0.215%, after earlier rising to 0.220%.
Benchmark 10-year JGB futures advanced 0.12 point to 146.83, flipping from early declines of as much as 0.17 point. Bond yields move inversely to prices.
(Reporting by Kevin Buckland; Editing by Mrigank Dhaniwala)
