HONG KONG - Philippine sovereign bonds bounced from a 3-day fall, as gains in stocks sparked some bargain hunting, but persistent market talk that the government may issue global debt before the end of the year capped gains.

"Prices have come down a bit in the last three days, so some investors, particularly from overseas, thought these are good levels to buy," a trader in Manila said.

The Philippines' 6.5% bond due in 2020 was trading half a point higher at 107.50/107.875 cents on the dollar, traders said.

After climbing on Wednesday to 107.875/108.25, its highest since it was sold in July, the debt has fallen after the finance chief said it was studying proposals for a global bond sale this year to fund the budget deficit.

"The government will probably issue bonds in late October or early November," another trader said. "They should pre-fund next year's budget now while there is still an appetite for it. It will be hard to do it next year because of the election in May."

Manila will probably sell at least $500 million of bonds in the foreign market by year end, the trader said.

The Philippines led by Finance Secretary Margarito Teves held a non-deal roadshow in New York last week.

In the broad market, the Asia ex-Japan iTraxx investment-grade index narrowed by 5 basis points (bps) to around 115, tracking gains in the equities market, a Hong Kong-based trader said.

The index rebounded from a 2-week high posted in the previous session.

"The credit market is bouncing back in line with the rise in equities markets," the trader said. Volume was thin as most investors were sidelined by the release of the US jobless data on Friday, he said.

The MSCI benchmark of Asia-Pacific shares outside Japan was up 1.8% as of 0401 GMT, tracking gains on Wall Street stocks overnight, as investors cheered a flurry of take over deals in the United States.