NEW YORK: US Treasuries prices gained on Thursday as a flare-up of euro zone debt fears added a safety bid for the bonds and traders awaited a key employment number on Friday for further signs of the strength of the US economic recovery.
Spain's bond yields rose further on Thursday as investors worried about the country's ability to meet budget targets, a day after an auction of the country's debt saw weak demand.
Renewed concerns in Europe boosted demand for safety assets including US Treasuries.
"The whole European situation seems to be reheating itself and there is more safe-haven type buying," said Sean Murphy, a Treasuries trader at Societe Generale in New York.
US government bonds have now fully retraced a selloff on Wednesday when investors were disappointed that minutes from a US Federal Reserve meeting did not give indications of further monetary policy easing.
"Investors are maybe having a little rethink, and thinking that the selloff might have been overdone," Murphy said.
Treasuries pared some price gains on Thursday after data showed that the number of Americans lining up for new jobless benefits fell to the lowest in nearly four years last week.
Investors are now focused on Friday's closely watched payroll employment, which is expected to show that US employers added 203,000 jobs in March.
Fed Chairman Ben Bernanke said last week that the modest pace of US growth was unlikely to cut unemployment quickly and that further stimulus remains an option.
Benchmark 10-year Treasuries were last up 15/32 in price to yield 2.17 percent, down from 2.22 percent late on Wednesday. Five-year notes increased 6/32 in price to yield 1.00 percent, down from 1.04 percent.
Thirty-year bonds were up a point in price to yield 3.30 percent, down from 3.36 percent late on Wednesday.
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