TREASURIES-10-year notes slip slightly; U.S. budget talks in focus

TOKYO Fri Nov 30, 2012 1:18am EST

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TOKYO Nov 30 (Reuters) - U.S. 10-year Treasuries prices fell slightly in Asia on Friday, as firm equities took away some of the appeal of fixed-income assets, but concerns about the still unresolved U.S. fiscal impasse limited losses.

* MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 percent to its highest since March 1, on course for a monthly gain of 2.1 percent.

* "Today's surprisingly good Japanese production data improved risk sentiment in Japan, and stocks around the region are also higher today," said a fixed-income fund manager at a Japanese asset management firm.

"The progress of the U.S. fiscal talks will be a key focus next week," he said.

* Japan's industrial output unexpectedly rose in October, suggesting stabilisation in the world's third-largest economy.

* U.S. lawmakers remained deadlocked on Thursday. Republican U.S. House of Representatives Speaker John Boehner reported no substantive progress, changing his tone from the previous day when he said he was "optimistic" about reaching a deal.

Democratic Senate Majority Leader Harry Reid said later his party was still waiting for a reasonable proposal from Republicans.

* Yields on 10-year Treasuries rose to 1.618 percent on Friday in Asian trade from 1.616 percent in late U.S. trade on Thursday.

* Yields on 30-year Treasuries rose to 2.801 percent from 2.793 percent on Thursday.

* On the supply side, the Federal Reserve will buy $1.75 billion to $2.25 billion of longer-term debt on Friday as part of its "Operation Twist" stimulus programme.

The Treasury auctioned $29 billion of seven-year notes on Thursday at a high yield of 1.045 percent.

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