JGBs steady as spectre of deflation offsets rallying stocks

TOKYO, Dec 1 (Reuters) - Japanese government bond prices were steady to slightly firmer on Monday as prospects of deflationary pressure taking a stronger hold on the economy helped offset a rally by Tokyo stocks.

The recent slide in crude oil prices, exacerbated by last week's decision by OPEC not to cut supply, is seen making the Bank of Japan's task to vanquish deflationary pressure even tougher and may prolong the central bank's already very loose easy monetary policy.

Moreover, concerns over disinflation stemming from lower oil has also driven down yields of other sovereign debt like U.S. Treasuries and euro zone bonds, providing JGBs with added support.

The benchmark 10-year JGB yield stood unchanged at 0.415 percent, a 1-1/2 year low touched on Friday.

The 30-year yield fell 1.5 basis points to 1.370 percent.

Tokyo's Nikkei hit a fresh seven-year high on Monday as data showing strong Japanese corporate spending and the yen weakening to a seven-year low versus the dollar lifted sentiment.

(Reporting by Shinichi Saoshiro and Tokyo markets team; Editing by Kim Coghill)

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