TREASURIES-U.S. bonds steady in Europe after Chinese data

LONDON Fri Jan 11, 2013 6:28am EST

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LONDON Jan 11 (Reuters) - U.S. Treasuries steadied in Europe on Friday as concerns about faltering monetary stimulus from China offset the impact of a slightly more upbeat euro zone outlook from the European Central Bank. U.S. debt prices resumed last week's falls on Thursday after the ECB noted some signs of economic stabilisation, dampening expectations of further rate cuts.

But an acceleration in China's consumer inflation rate narrowed the scope for further monetary easing, causing selling pressure in stock markets and supporting safe-haven instruments such as U.S. debt.

U.S. 10-year T-note yields were 0.7 basis points lower at 1.8923 percent, while T-note futures were flat at 131-23/32.

"There seems to be good support around 1.90 percent in 10-years," RIA Capital Markets bond strategist Nick Stamenkovic said. "We had ... disappointing inflation data out of China and the European equity market has run out of steam this morning - maybe a bit of profit taking - consequently Treasuries have recouped some of their losses."

The 10-year yield has climbed more than 15 bps so far in January, having gotten a lift after U.S. policymakers reached a deal to avoid large scale fiscal-tightening that could have pushed the economy back into recession.

The rise gained added momentum after minutes of the Federal Reserve's December meeting, released last week, raised concern that the Fed could stop its asset purchases, known as quantitative easing, before the end of the year.

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