Prices for U.S. Treasuries slump after Fed statement

NEW YORK Wed Dec 12, 2012 12:40pm EST

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NEW YORK Dec 12 (Reuters) - Prices for U.S. Treasuries dropped sharply after the Federal Reserve said it will buy longer-term Treasury securities after its "Operation Twist" finishes at month-end.

In a surprise move, the Fed also adopted numerical thresholds for policy, a step that had not been expected until early next year.

Despite an initial bounce higher after the statement, prices gave up earlier gains to plunge, with 30-year bonds falling more than a full point.

Prices for 10-year notes fell 09/32 to yield 1.685 percent, with 30-year bonds off 1-05/32 to yield 2.899 percent.

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