Foreign investors snap up long-term Japan bonds after three-week selling streak

(Reuters) - Foreign investors ended a three-week trend of selling Japanese bonds by purchasing long-term securities, although analysts suggest the rebound could be fleeting amid ongoing market uncertainties.

They bought 1.7 trillion yen in long-term bonds in the week ended May 10, the largest purchase in eight weeks, according to Ministry of Finance data.

Foreigners offloaded about 2.43 trillion yen worth of short-term local bonds after netting approximately 3.78 trillion yen the previous week, data showed.

After raising interest rates in March, the Bank of Japan held rates steady at the end of April and continued its usual bond purchases.

While some perceived this stability positively, there are concerns that the Japanese bond market still faces challenges, including the potential for tighter monetary policy, yen volatility and rising inflation.

In the Japanese equities market, cross-border outflows eased to 17.28 billion yen during the week ended May 10, from about 263.31 billion yen outflows in the previous week, data from stock exchanges showed.

Overseas investors still purchased about 263.61 billion yen worth of cash equities, thanks to a downside surprise in U.S. job growth that rekindled hopes of rate cuts by the Federal Reserve this year.

They sold derivative contracts of about 280.89 billion yen last week.

Japanese domestic investors, meanwhile, remained net sellers of long-term foreign bonds for a third successive week, withdrawing about 396.6 billion yen on a net basis. They, however, poured about 21 billion yen into short-term debt instruments.

Meanwhile, domestic players shed about 387.3 billion yen of overseas equities after two weeks of net purchases in a row.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Eileen Soreng)