Yields on 10-year Treasuries extended Thursday's falls after House of Representatives Speaker John Boehner acknowledged his bill lacked the votes to pass.

 Boehner said late on Thursday after cancelling a vote on his so-called Plan B, it was up to President Barack Obama to work with fellow Democrats in the Senate to hammer out a deficit-reduction deal that could avert the "fiscal cliff" of tax hikes and spending cuts.

 US benchmark yields could pull further away from eight-week highs hit earlier in the week, traders and strategists said, but added a compromise could still be reached before year end, curbing the rally in safe-haven debt.

"The news overnight that the Plan B for Mr. Boehner didn't even make the ballot box is giving Treasuries a bit of a lift. If they don't reach a compromise by year-end they can still make an agreement in January and make it retroactive," said Nick Stamenkovic, a strategist at RIA Capital Markets in Edinburgh.

"But clearly if they come into new year, the fiscal negotiations are still on a knife edge and no agreement is being made, investors will be nervous about the adverse impact on the US economy and will put money into safe-haven assets such as Treasuries," he added.

Yields on 10-year Treasuries were last down 4 basis points at 1.76 percent in European trade, after dropping as low as 1.746 percent in Asian hours from 1.803 percent in late US trade.

Earlier this week, the 10-year yield rose to an eight-week high of 1.847 percent on rising optimism that a budget deal was close but this dissipated after the latest setback.