TREASURIES-Treasury prices rebound on hopes for more Fed action

* Bernanke says Fed will 'do all it can' for the economy

* ECB Trichet's comments seen as a signal rates on hold

* U.S. weekly jobless claims rise unexpectedly

(Changes headline, lead, adds quote, Bernanke speech)

By Emily Flitter

NEW YORK, Sept 8 (Reuters) - U.S. Treasury prices rose on
Thursday as a combination of vague encouragements from Federal
Reserve Chairman Ben Bernanke and a dismal data point on the
job market raised hopes for another Fed bond buying program.

Bernanke told an audience at the Economic Club of Minnesota
that the Fed will "do all it can to help restore" economic
growth and employment. [ID:nW1E7IR02M]

Many market participants took that to mean the Fed could
implement a maneuver dubbed Operation Twist, in which it would
sell short-term Treasuries from its balance sheet and buy long
bonds to help lower long-term interest rates.

"It's almost like if it's really bad then it must be good
because then Bernanke will be forced to step in," said Doug
Roberts, chief investment strategist at at Channel Capital
Research in Shrewsbury, New Jersey.

Many analysts expect the Fed could announce the program at
its next scheduled policy meeting, on Sept. 20-21.

"Operation Twist continues to get a lot of press, and
Trichet came out and talked about unusual measures to stem the
economic tide, and with that the market has gotten a lift,"
said Scott Graham, head of government bond trading at BMO
Capital Markets in Chicago.

Data showing an unexpected rise in U.S. jobless claims last
week also was supportive of Treasuries prices. Continued high
unemployment is seen as one of the major hobbles to the U.S.
economic recovery.

"We get one report that's really bad like the initial
claims number this morning and as long as the hope is there, it
seems to form some type of expectation for stimulus," Roberts
said.

U.S. President Barack Obama on Thursday evening will speak
on the employment situation, and he is expected to unveil a
jobs-creation package worth $300 billion.

Benchmark 10-year notes US10YT=RR were trading 15/32
higher in price to yield 2 percent, down from 2.05 percent late
Wednesday, while 30-year bonds US30YT=RR were 21/32 higher in
price to yield 3.32 percent from 3.37 percent.

"We don't know what (Bernanke and Obama) can do about 9
percent unemployment, but we are hopeful their words of
confidence will calm the stock market, that most leading of
economic indicators," said Chris Rupkey, financial economist at
Bank of Tokyo-Mitsubishi UFJ in New York.

Comments from European Central Bank President Jean-Claude
Trichet were also seen as indicating rates in the currency bloc
will remain on hold, setting a bullish tone for government debt
globally.

The ECB's Trichet said inflation risks in the euro zone are
broadly balanced, which cemented expectations that interest
rate increases are on the back burner. He also flagged slow
growth ahead for the currency bloc and said even that was
uncertain. For details see [ID:nL5E7K739F].

In the United States, applications for unemployment
benefits rose to 414,000 in the week ending Sept. 3 from an
upwardly revised 412,000 the prior week, the Labor Department
said. Wall Street analysts had been looking for a dip to
405,000. [ID:nN1E7870A9]
(Additional reporting by Chris Reese;)