TREASURIES-U.S. bonds rise as Europe elections raise risk

TOKYO Mon May 7, 2012 12:33am EDT

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TOKYO May 7 (Reuters) - Treasury prices gained in Asia on Monday, as the outcome of elections in Greece and France raised concerns about the progress of European austerity steps and fueled a rally ignited by downbeat U.S. employment data.

* Greek voters rejected pro-bailout policies, putting the country's future in the euro zone at risk and threatening to revive Europe's debt crisis, while Socialist Francois Hollande won a presidential election in France and promised to start a pushback against austerity policies.

* Ahead of the weekend elections, disappointing U.S. employment data on Friday provided more evidence the world's largest economy is slowing and sent the yield on the benchmark U.S. 10-year note below key chart resistance at 1.90 percent.

* "The U.S. employment data helped bonds gain, but going forward this week, investors will mainly focus on European concerns," said Tomoaki Shishido, bond analyst at Nomura Securities.

"But although the Greek election outcome raises worries, it will take some time to play out, so there might not be an immediate impact on markets," he added.

* The yield on 10-year Treasuries slumped to 1.83 percent, down from 1.88 percent in late U.S. trade and sharply below 1.95 percent in Asian trading on Friday.

* The 30-year bond yield was at 3.03 percent, down from 3.09 in late U.S. trading and well below 3.15 percent in Asia on Friday.

* On the supply side, the U.S. Treasury will auction $72 billion in coupon-bearing debt this week.

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