German and French leaders said they were determined to keep Greece in the euro zone as they urged Greek leaders to implement terms of an aid plan, but gave no clear sign that a stalemate over the next bailout payment to Athens had been broken.

T-note futures fell 5/32 to 129-55/64 with benchmark 10-year T-note yields at 2.03 percent, up 3.5 basis points from late US levels on Wednesday.

"It seems to be a pullback in the flight to quality trades as equity markets are up in Europe and we're seeing that Bunds and gilts are off so Treasuries are fading as well," a trader said.

"We're subject to headline news and the market is moving on that and if anything the market will continue to grind lower but...as soon as something changes it's risk off again then we're going to see strong buying in the 10-year part of the curve again. I don't think anything fundamentally has changed."

Treasuries slightly outperformed German Bunds with the 10-year T-note yield premium over Bunds falling to 12 basis points from 14 bps in late European trade on Wednesday with analysts still cautious that Greece could avoid defaulting.

Expectations that the Federal Reserve will introduce new easing measures next week are also seen keeping the 10-year yield around 2 percent in the near future.

The US Treasury department will at 1500 GMT announce weekly 3-month and 6-month bill offerings, as well as sales of 52-week bills and 10-year inflation-protected securities.

The 30-year T-bond yield was up 4 bps at 3.32 percent. Expectations that the Federal Reserve will not target the longest US government debt maturity in any new stimulus programme to help the economy have reduced the allure of the 30-year issue, investors said.

Federal Reserve Chairman Ben Bernanke will give brief opening remarks before a conference in Washington, D.C. at 1245 GMT.

Copyright Reuters, 2011