Bank of Japan Governor Toshihiko Fukui sought on Thursday to tame market expectations of an imminent rate hike, saying the central bank would keep rates near zero for a while despite ending its ultra-easy policy framework last week. Benchmark 10-year Japanese government bond futures rose about a third of a point and the yen stumbled after Fukui told a parliamentary committee that it was still too soon to consider rate hikes. "It is too early to discuss when to end the zero interest rate policy, as we have only just ended our quantitative easing framework," Fukui said. The central bank last Thursday scrapped its unusual, five-year-old policy of flooding the banking system with cash, known as quantitative easing, but kept short-term interest rates near zero percent. Financial markets had expected the BOJ to raise rates around the last quarter of the calendar year, but bullish comments on the economy by Fukui and hawkish policy remarks by BOJ board member Atsushi Mizuno had recently triggered speculation of an earlier shift. Fukui's latest comments appeared to counter such speculation. "We will not immediately head towards tightening," Fukui told the committee. "We will continue to support the economy with an accommodative environment." Fukui also said that rates would gradually be adjusted higher depending on trends in the economy and prices. "In this process, if it is judged that upward pressure on prices is contained as the economy remains on a steady growth path, there is a high possibility that an accommodative monetary environment with very low interest rates will probably stay for some time," he said. The June futures contract rose to a session high of 134.15, up more than 0.30 point after those remarks. The contract had earlier fallen to a low of 133.71. The yen fell to the day's low of around 117.89 yen against the dollar, according to electronic trading platform EBS. It also hit the day's trough against the euro at 141.96 yen . "The market had been pricing in an early rate hike, and the rise in yields was pretty rapid, so his remarks were likely aimed at stopping that," said Koji Ochiai, senior market analyst at Mizuho Securities. Takeo Okuhara, a senior economist at Daiwa Institute of Research, noted that Fukui had not denied the possibility of a rate hike by the end of the year either. "He is not saying that it will not end zero interest rates in three months, when it finishes lowering the current account deposits," he said. As part of ending quantitative easing, the BOJ is due to drain the amount of excess funds in the banking system, previously targeted at around 30-35 trillion yen, to around 6 trillion yen, the level of required reserves. "The comments are not a denial of a rate hike this year and one shouldn't take them at face value," Okuhara said. But a Reuters survey earlier on Thursday suggested the BOJ may be wise in acting cautiously. The Reuters Tankan, a monthly survey of leading Japanese companies, showed manufacturers' business confidence sagged in March. The survey produced a diffusion index (DI) of +25 for manufacturing firms in March, down from +34 in February and +32 three months earlier, suggesting the BOJ's influential tankan survey due in about two weeks may also be downbeat.