JGBs tumble as Treasuries hit by Fannie, Freddie takeover

* JGB futures hit as Treasuries slide on Freddie, Fannie

* Some traders say selling may lead to correction in futures

* But anomalies remain in futures before contract roll-over

* Doubts of fast recovery in growth, financials support JGBs

By Chikako Mogi

TOKYO, Sept 8 (Reuters) - Japanese government bonds tumbled on Monday on a slide in U.S. Treasuries, as the U.S. government's takeover of mortgage giants Fannie Mae and Freddie Mac pushed stocks sharply higher and reduced investors' appetite for safe-haven bonds.

Benchmark 10-year Treasury yields rose as high as 3.900 percent <US10YT=RR> in Asia trading on Monday, up 19 basis points from 3.708 percent in late U.S. trade on Friday. The takeover may also mean more government borrowing and federal exposure to risky mortgage assets battered by the housing slump. [US/]

The rescue plan sent U.S. stock index futures soaring, and the Nikkei average .N225 jumped 3.6 percent on Monday.

September 10-year futures 2JGBv1 tumbled as low as 137.32, down 1.36 points on the day. They hit a five-month peak of 139.09 on Friday.

The benchmark 10-year yield <JP10YTN=JBTC> jumped 7 basis points to 1.530 percent, moving away from a four-month low of 1.400 percent hit late in August.

"The initial reaction to the U.S. government takeover of the mortgage companies is to sell JGBs, pushing yields higher," said Naomi Hasegawa, a senior fixed-income strategist at Mitsubishi UFJ Securities.

"But the selling may not be so sharp, because it will still take time before the U.S. housing market recovers, the economy regains strength and the financial system is stabilised," she said.

The takeover of the U.S. finance companies is the latest move by Washington to shore up the slumping housing market and was taken to ward off more global financial market turbulence. [ID:nN07479172] [ID:nN07463067]

Despite the selling pressure, investors were scooping up cash bonds on dips.

Cash bond yields rose across the board, helping to revive investor appetite for the bonds at current yield levels, particularly the five-year sector ahead of Tuesday's auction.

The Ministry of Finance will offer 1.9 trillion yen ($17.43 billion) in five-year JGBs.  Continued...