TREASURIES-Investors scoop up longer bonds at quarter-end
* Treasuries prices rise on quarter-end rebalancing
* Bonds benefit from reduced risk appetite as stocks fall
* Fed to buy and sell $44 bln Treasuries in October
* Long-dated debt on track for best quarter since Q4 2008 (Adds 1st Operation Twist schedule, updates prices)
By Karen Brettell
NEW YORK, Sept 30 (Reuters) - U.S. Treasuries prices jumped on Friday as global economic fears knocked stocks lower and raised demand for low-risk debt, while long bonds also benefited from demand to rebalance positions for quarter-end.
Thirty-year bonds led the rally, as investors sought out longer maturities partly to match their portfolio benchmarks.
Long-dated Treasuries are on track for their best quarterly performance since the last three months of 2008 during the height of the global credit crisis.
Fears over the euro zone debt crisis and anticipation of the Federal Reserve's $400 billion program to extend the maturity of its Treasuries holdings compounded the fervor for U.S. government debt.
The Fed's latest stimulus measure, dubbed "Operation Twist," involves the central bank purchasing the majority of net long bond issuance.
"People need to have duration and people are very fearful that the Federal Reserve program is going to take all the securities out of the market," said Chris Ahrens, interest rate strategist at UBS in Stamford, Connecticut.
"They may need to move now rather than wait until later when nothing's available."
The New York Federal Reserve, which will conduct the operation, said on Friday it will sell $44 billion in short-dated Treasuries from its portfolio and buy the same amount of longer-dated issues in the open market in October. (For more on the Fed's October operations, click on: here)
Fed purchases will now absorb most new long-maturity debt supply, with only around $3 billion to be left out of $42 billion sold per quarter, according to TD Securities.
Investors have also been selling shorter-dated debt ahead of the Fed's sales of these maturities.
Three-year Treasury yields, for example, have increased to 0.42 percent from 0.29 percent before the Fed's announcement, though they remain near their record lows of 0.27 percent.
Reduced appetite for risk ahead of the weekend and worries over the global economy, which sent stock prices lower, also increased the relative attractiveness of U.S. government debt.
U.S. stocks fell as China's manufacturing shrank and stirred fears the global economy was slowing. The Standard & Poor's 500 index .SPX was down 1.5 percent. See [.N]
Benchmark 10-year notes US10YT=RR were last up 23/32 in price to yield 1.92 percent, down 8 basis points from Thursday. Thirty-year bonds US30YT=RR jumped 2-30/32 in price to yield 2.92 percent, down from 14 basis points from Thursday. (Additional reporting by Richard Leong, Editing by Chizu Nomiyama)
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