TREASURIES-Prices rise as labor data shrugged off; U.S. yields beckon
* Traders shrug off surprise drop in jobless claims
* Ukraine crisis threatens euro zone economy, Draghi says
NEW YORK, Aug 7 (Reuters) - U.S. Treasuries prices rose on Thursday as investors shrugged off rosy U.S. labor market data and focused on a Russian ban of Western food imports and increasingly attractive U.S. yields.
Benchmark 10-year notes, which yielded over 2.50 percent on Tuesday, were up 2/32 in price to yield 2.47 percent in New York trading.
Treasuries pared earlier gains that had 10-year yields at 2.44 percent and briefly traded near unchanged, as data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week.
But Treasuries rose again as European Central Bank President Mario Draghi told reporters in Frankfurt that the Ukraine crisis threatened the euro zone economy.
"Draghi seems to be striking a cautionary note," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.
"The thing to look at is the relative value between U.S. and European rates," LeBas said. "With the German 10-year (yielding) below 1.1 percent, it is easy see why many investors would be interested in the U.S. market."
Russia said on Wednesday it would ban all food imports from the United States and all fruit and vegetables from Europe, in a sweeping response to Western sanctions for Moscow's support for separatists in Ukraine.
"The real issue is how the sanctions are going to influence economic activity," LeBas said. "One estimate puts the cost of Russia's refusal to import foreign food at as much as 2 percent. That would have a big negative economic impact."
The Russian action rattled European equity and debt markets and fueled buying of U.S. assets. The dollar was up on currency markets and Wall Street opened higher on the U.S. jobs data, which pointed to a strengthening of labor market conditions.
The U.S. Labor Department said initial claims for state unemployment benefits decreased by 14,000 to a seasonally adjusted 289,000 for the week ended Aug. 2. Economists polled by Reuters had forecast claims to rise to 305,000.
"Sub 300,000 is obviously a pretty string number," LeBas said. "By some metrics, we are in the best labor market since '97. If you look at the unemployment rate among those with bachelor degrees, we are back toward where we were in the hey-day of the mid 2000s."
Thirty-year Treasury bonds were up 4/32 in price to yield 3.27 percent. The long bond had earlier yielded as little as 3.24 percent. (Reporting by Michael Connor in New York; Editing by Bernadette Baum)