TOKYO: US Treasury bond prices rose in Asia on Wednesday, getting a tailwind from weaker equities ahead of a meeting of European leaders, but supply concerns about upcoming note sales kept gains in check.
Later on Wednesday, the Treasury will offer $35 billion of five-year notes. That will be followed by $29 billion of seven-year notes on Thursday.
The sales are part of this week's total $99 billion of offerings, which began on Tuesday with a $35 billion sale of two-year notes that drew near-average demand.
Also on Wednesday, European Union leaders will meet and are expected to consider a plan for regional bonds to be jointly underwritten by all euro zone member states, aimed at containing the region's debt crisis.
"The major problems still exist. People who were exiting the market lately were traders who were a little bit long, who know that markets don't rally forever," said a trader at a European brokerage in Tokyo.
"There's still a large amount of risk. Overbought turns into a small correction, but then moves right back," he said.
The yields on 10-year notes fell to 1.76 percent, from 1.78 percent in late U.S trading, matching their level in Asian trade on Tuesday.
The 30-year bond yield fell to 2.85 percent, from 2.87 percent in late US trade but above 2.83 percent in Asian trade on Tuesday.
MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1.95 percent, which added to the allure of safe-haven fixed income assets.
On the U.S economic front, Tuesday's data showed US home resales rose in April to their highest annual rate in nearly two years, while a fall-off in foreclosures pushed home prices higher.
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