* Some Japan brokers avoid selling European debt for now
* German ban on naked short sales makes players cautious
(Adds more comment)
By Masayuki Kitano and Satomi Noguchi
TOKYO, May 19 (Reuters) - Germany's decision to ban naked short sales of euro-denominated government bonds is prompting some Japanese brokers to avoid selling European debt during Asian trading hours, market players said on Wednesday.
"For today the situation is that it's hard for us to take orders on European bonds," said Yasutoshi Nagai, chief economist at Daiwa Securities Capital Markets. "For clients looking to buy, we are asking them to buy Treasuries," he said.
Uncertainty about the details of Germany's ban on naked short selling was making brokers cautious and came as a headache for some Japanese investors, market players said.
"Since we don't trade in Tokyo hours, our company has not been hurt, but some players such asset management companies which do trade in Tokyo are believed to be getting hurt by this situation," said a senior manager of foreign bond investment at a major Japanese life insurer.
Germany, in an attack on the financial speculation on which it blames much of the euro zone's debt crisis, announced on Tuesday a ban on naked short sales of euro-denominated government bonds, credit default swaps based on those bonds, and shares in Germany's 10 leading financial institutions.
Naked short selling is when a trader sells short a financial instrument he does not possess, betting that its price will fall, without first borrowing the instrument or confirming if it can be borrowed.
"What I have heard is that during Tokyo trading hours, brokerages cannot give prices for trades that would involve selling (of European bonds) by the brokerages," said Junji Kojima, senior deputy general manager at Sompo Japan Insurance's global securities investment department.
Kojima said he had heard that such steps were being taken by more than one Japanese brokerage house.
The brokers apparently want to avoid taking orders to sell to investors European bonds that they do not have in their inventories, Kojima said, adding that the situation was likely to normalise once European markets open.
"Once we get into London trading hours, there probably won't be any problems since they would be able to procure them from the market," Kojima said.
But not all were convinced that the situation would normalise quite so quickly.
"The brokerage firms are saying they cannot give prices because they are not sure about what exactly a 'naked' position is. It is probably inevitable that there will be market turbulence on such confusion once the London market opens," said the senior manager of foreign bond investment at a major Japanese life insurer. (Editing by Joseph Radford)