[TOKYO] Japanese government bond (JGB) prices gained across the board on Tuesday as US President Donald Trump's threat to raise tariffs on Chinese goods this week rekindled fears of a trade war, stoking demand for safe-haven debt.

Japan's Nikkei dropped 1.5 per cent as investors returned from a 10-day holiday and faced concerns that the US-China trade negotiations may be derailed.

The five-year and 10-year JGB yields each declined by a basis point to minus 0.180 per cent and minus 0.060 per cent, respectively.

The 30-year yield dropped 2 basis points to 0.540 per cent.

The JGB market took in stride the Bank of Japan's decision to trim the amount of JGBs with 10 to 25 years of maturity it plans to buy at its regular JGB-purchasing operations in May.

The central bank announced at the end of last month that it will buy 100 billion yen to 250 billion yen (S$1.23 billion to S$3.08 billion) of 10- to 25-year maturity JGBs at each operation this month, compared with the range of 150 billion yen to 250 billion yen it had set for April.

The Bank of Japan's balance sheet has ballooned with JGBs due to extensive monetary easing, and it has been gradually trimming the amount of debt it buys at market operations.

REUTERS