JAPANESE SEEN LIGHTENING U.S. BOND HOLDINGS

  The dollar's tumble to a record low of
  144.70 yen in Tokyo today motivated some major Japanese
  investors to lighten their U.S. Bond inventory further and is
  expected to spur diversification into investment assets
  including foreign and domestic shares, dealers said.
      The key U.S. 7-1/2 pct Treasury bond due 2016 fell to a low
  of 96.08-12 in early Tokyo trade against the 98.05-06 New York
  finish, then recovered to 96.20-22.
      Some trust bank pension fund acccounts and investment
  trusts were seen selling several hundred million dollars on the
  foreign exchange market here today, accentuating the unit's
  tumble, securities house dealers said.
      They seem undecided on what to do with the fresh yen cash
  positions resulting from their dollar sales today, and are
  sidelined until the currency market stabilises and the interest
  rates outlook clarifies, a Nikko Securities Co Ltd currency
  trader said.
      The dollar's plunge and low yields on U.S. Bonds will
  further promote diversification into other foreign investments,
  as well as call back funds into the domestic bond and stock
  markets from overseas bond markets, securities bond managers
  said.
      They said major Japanese investors in the past two years
  are estimated to have held 50 to 80 pct of their foreign
  portfolios in U.S. Bonds but many have lightened their U.S.
  Bond inventory to as low as 40 pct.
      Since late last year, Japanese investors, seeking
  substantial liquidity and attractive yields, have used fresh
  funds to buy mark and Canadian dollar bonds and, after the
  Paris currency pact, actively bought French franc bonds and
  gilts while gradually lightening U.S. Bond inventories, the
  managers said.
      Dealers said funds tied up in foreign assets had flowed
  into local bond and stock markets as well.
      The yield of the key 5.1 pct 89th bond dropped to a record
  low of 4.080 pct today from the 4.140 Saturday finish and
  compared with 4.25 pct on three-month certificates of deposit.
      The key bond has fluctuated less than five basis points for
  more than a month here, suggesting most dealers could not
  satisfy their needs for capital gains, dealers said.
      A market survey by Reuters showed some active accounts in
  U.S. Treasuries are currently dealing on Tokyo's stock market.
  The stock market's bullishness late last week was partly due to
  funds transferred from U.S. Treasuries, dealers said.
      Japanese net purchases of foreign securities in the first
  half of March fell an estimated one billion dlrs compared with
  average monthly net purchases of 7.7 billion for the whole of
  1986, Finance Ministry sources said.
      The steep fall is due to Japanese investors' cool attitude
  towards U.S. Bonds, which had amounted to more than 80 pct of
  total foreign securities purchased, securities houses managers
  said.
      Foreign stock buying in March is expected to exceed the
  record high of 1.5 billion dlrs seen in December, they said.
      "Diversification of foreign portfolios is underway and we
  have bought bonds in currencies such as marks, the Canadian
  dollar, the ECU and French franc," a fund manager at &lt;Yasuda
  Trust and Banking Co Ltd> said.
  

