TREASURIES-Bonds firm, 10-year yield dips below 2 pct mark

TOKYO Wed Jan 30, 2013 11:05pm EST

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TOKYO Jan 31 (Reuters) - U.S. Treasuries firmed in Asia on Thursday, with the 10-year yield dipping below the 2 percent mark, after the Federal Reserve stuck to its script that policy support was needed to bring down unemployment.

* The yield on 10-year notes dipped slightly to 1.985 percent from 1.996 percent in late U.S. trade and its nine-month high of 2.037 percent hit on Wednesday.

* "There were worries that the Fed may become a bit more hawkish," said Tomoaki Shishido, fixed income analyst at Nomura Securities.

* The Federal Reserve on Wednesday left in place its monthly $85 billion bond-buying stimulus plan, arguing the support was needed to lower unemployment even as it indicated a fourth-quarter stall in U.S. economic growth was likely temporary.

* Although no one had expected a radical change in the Fed's policy stance, some market players had been worried it could rejig its statement to reflect uneasiness among some Fed board members about its asset-buying program.

* Also earlier on Wednesday, data showed a surprise contraction in the U.S. gross domestic product in the fourth quarter, briefly sending Treasury priced higher.

* But they pared back gains quickly as traders realised that the contraction was caused by weak government spendings and slow inventory growth while consumer spending and business investment were in fact solid.

* The focus is now moving to January payrolls data due on Friday, as an unexpectedly strong improvement in the job market could spark speculation that the Fed may wind up its bond buying programme earlier than expected.

* Analysts polled by Reuters expect U.S. employers added 160,000 new jobs this month, up marginally from 155,000 new positions added in December. The unemployment rate is expected to be unchanged from December at 7.8 percent.

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