LONDON: US Treasury debt prices pushed higher in Europe on Thursday after a Moody's downgrade of Spain's credit ratings reignited concerns about the euro zone debt crisis, spurring flight-to-quality bids.
Weak Chinese data and continued fighting in Libya also dampened investor appetite for riskier assets such as equities and supported demand for safe-haven government bonds.
A solid 10-year bond auction on Wednesday made traders optimistic about the outcome of a 30-year T-bond auction later on Thursday, which will cap this week's supply.
"The market is happy to play flight-to-quality bets and trading the risk-off," a trader said. "Equities are on the weaker side and commodities are also slightly weaker this morning while Portuguese, Spanish and Italian spreads (over German benchmarks) are slightly wider."
The 10-year T-note was last up 5/32 in price to yield 3.453 percent, about two basis points more than in late New York trade while the 30-year T-bond gained 3/32 in price to yield 4.60 percent, about half a basis point down.
Ten-year T-note futures rose 7/32 to 119-4/32.
Some analysts said the news on Wednesday that PIMCO, the world's largest bond fund, had gone ultra bearish on the United States by dumping all of its US government-related debt holdings, may prove positive for the market as they have no more paper to sell and will probably become a buyer in the future.
The oil price continued to attract market players' attention, as it traded near peaks hit in recent weeks. "I think oil is likely to remain the theme of the market because if oil prices remain at current high levels, that will surely hurt the economy," said a trader at a Japanese bank.
Brent crude topped $116 a barrel as intense fighting in Libya stoked more supply worries.
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