Ten-year Treasuries edged up 3/32 in price to yield 1.901 percent , down roughly 1 basis point from late US trade on Thursday.

The 10-year yield had dipped to around 1.86 percent at one point on Thursday, its lowest level in more than two months. It later clawed away from that trough as Treasuries retreated on data suggesting the US economy was picking up some steam.

The number of Americans filing new claims for jobless benefits fell to a 3-1/2-year low last week and factory activity in parts of the Northeast gained speed in December, data showed on Thursday.

"US macro economic indicators have been pretty good...but given the problems in Europe it looks like a full-fledged rise in yields will be difficult," said a director for a Japanese brokerage house in Tokyo.

Treasuries have been rallying recently, supported by nervousness over the euro zone's sovereign debt crisis, and as investors move to bolster balance sheets by buying low-risk assets heading into year end.

Copyright Reuters, 2011