Ten-year notes rose around 2/32 in price to yield 1.647 percent, down roughly 1 basis point from late US trade.

Ten-year Treasuries had retreated on Thursday after Spain announced a budget for 2013 based mostly on spending cuts, a move that was seen by many as an effort to pre-empt the likely conditions of an international bailout.

Madrid is talking to EU authorities about the terms of a possible aid package that would trigger an European Central Bank bond-buying programme and ease Spain's unsustainable funding costs.

The sell-off in 10-year Treasuries on Thursday came after eight straight days of gains, and Treasuries may now be ready to take a breather following that rally, said Tomohisa Fujiki, interest rate strategist for BNP Paribas Securities in Tokyo.

"The market may now be at levels where prices could become heavy on the top side," he said.

The focus now is on when Spain might formally request aid, Fujiki said, adding that the market is also waiting for the results of Moody's review of Spain's sovereign rating. Treasuries could attract some buying if Spain is downgraded to junk status, he added.

One factor that could help support Treasuries later on Friday is the potential for month-end portfolio tweaking by investors, said a trader for a US brokerage house in Tokyo.

"I think if anything, going into the weekend we're going to trade very firm," the trader said.

Ten-year Treasuries have rallied over the past couple of weeks on worries about the outlook for global economic growth and also due to uncertainty about Spain's progress toward asking for a bailout.