TOKYO - The yield on Japan's benchmark 10-year government bond briefly hit 2.900 percent Thursday afternoon for the first time since November 1996 amid fears over a flare-up of tensions in the Middle East.
Government bonds have come under pressure as renewed attacks between the United States and Iran pushed crude oil futures up, fueling concerns about inflation in Japan as the resource-poor nation is heavily reliant on energy imports.
Lingering worries about Japan's fiscal health under Prime Minister Sanae Takaichi's "responsible proactive" fiscal policy have also accelerated selling of bonds.
Bond yields move inversely to prices.
The U.S. dollar stayed strong, trading mostly around the mid-162 yen level in Tokyo, as the rekindled concern over the Middle East drew dollar-buying, dealers said.
Despite such growing concerns, stocks remained firm, with the benchmark 225-issue Nikkei index briefly gaining more than 2 percent, driven by heavyweight semiconductor-related shares amid optimism about chip companies' growth prospects.
