TREASURIES-bonds drop on relief over Cyprus bailout

TOKYO, March 25 Mon Mar 25, 2013 12:16am EDT

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TOKYO, March 25 (Reuters) - U.S. Treasuries dropped on Monday on relief as Cyprus clinched a last-ditch deal with international lenders for a 10 billion euro ($13 billion) bailout hours before a deadline to avert a financial collapse on the Mediterranean country.

* The yield on the 10-year notes rose to 1.963 percent from 1.927 percent at the end of last week while U.S. share futures gained about 0.4 percent.

* The latest deal on Cyprus included drastic measures such as closing down the country's second largest bank and freezing deposits above 100,000 euros, causing a far larger hit on large account holders than a botched bank levy plan would have done.

* Still, investors took the news as positive for risk sentiment, as they judged that risk of contagion to other euro zone countries will be limited after Cyprus has avoided a chaotic exit from the euro zone.

* "I think the market will put Cyprus behind it from now. It is a small country, so the impact will be limited," said a trader at a Japanese bank.

* German Finance Minister Wolfgang Schaeuble also said the measures do not need an approval by the Cypriot parliament as necessary legislation has been already passed.

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