TREASURIES-U.S. 10-year yield near 2013 low on weak jobs data

SINGAPORE, April 8 Sun Apr 7, 2013 11:17pm EDT

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SINGAPORE, April 8 (Reuters) - The U.S. 10-year Treasury yield hovered near its lowest level so far this year on Monday after weak jobs data released last week stirred worries that the economic recovery may be losing momentum.

* U.S. 10-year Treasuries rose 4/32 in price to yield about 1.701 percent in Asian trade.

The 10-year yield slipped about 1 basis point from late U.S. trade on Friday and hovered within sight of Friday's low of 1.677 percent, its lowest level since last December.

* American employers hired at the weakest pace in nine months in March, data showed on Friday, a sign tax hikes that kicked in early this year could be stealing momentum from the economy.

* "It seems as if both the market and the FRB will be focusing on downside risks to the economy during the April-June quarter," said Shinichiro Kadota, a strategist for Barclays in Tokyo, referring to the U.S. Federal Reserve.

* Analysts say the weak jobs report is likely to ensure that the Fed will keep its quantitative easing policy in place for some time. The Fed is buying $85 billion of Treasuries and mortgage-backed securities each month to boost growth and hiring.

"The Fed isn't going to stop buying until we've seen the whites of the eyes of inflation, and that's still ways away," said a trader for a U.S. brokerage in Tokyo.

"People are just trying to guess when that's going to happen and it's not going to happen soon," the trader said, adding that this was especially the case when considering that people are dropping out of the workforce.

The jobs data showed that the jobless rate fell to 7.6 percent, but the report showed that much of the drop was due to a shrinkage in the labour force.

* The market's appetite for Treasuries will be tested at debt auctions later in the week. The Treasury is due to sell three-year notes on Tuesday, followed by auctions of 10- and 30-year government debt in ensuing days.

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