March 14 (Reuters) - Foreign investors significantly

increased their purchases of Japanese bonds last week amid

growing expectation that Japan may soon end its long-standing

negative interest rate policy and start increasing rates this

year.

They acquired a massive 1.15 trillion yen (about $7.8

billion) of long-term Japanese bonds on a net basis last week,

the largest weekly net purchase since early-April 2023, data

from the Ministry of Finance showed.

Japanese short-term debt securities drew a net 2.22 trillion

yen in overseas capital last week after about 2.75 trillion yen

of net purchases in the prior week.

The Bank of Japan will debate ending its negative interest

rate policy next week if Friday's preliminary survey on big

firms' wage talks outcome yields strong results, sources said,

marking a landmark shift away from its decade-long stimulus

programme.

Yields on one-year Japanese treasury bills, which

traded sideways through 2023, are up a relatively sharp 8 basis

points in 2024 to a near almost decade high of 0.067%, while

six-month yields, negative for eight years, leapt

above zero last week.

Bond yields rise when prices fall. Higher yields can attract

new investors.

Meanwhile, overseas investors were net buyers of Japanese

equities for a second consecutive week, securing 198.35 billion

yen in stocks, even as shares pulled back from record highs.

The Nikkei share average shed about 0.56% last week,

snapping its five-weeks-long winning streak.

Foreign investors bought cash equities and derivative

contracts of about 176.39 billion yen and 21.96 billion yen,

respectively, on a net basis last week.

Japanese investors, meanwhile, secured about 1.58 trillion

yen of long-term foreign bonds, logging the largest weekly net

purchase since Jan. 12. They also poured about 6.6 billion yen

into short-term debt instruments.

Conversely, domestic investors pulled roughly 616.5 billion

yen out of foreign equities as they extended net selling into a

second co consecutive week.

($1 = 147.8900 yen)