TREASURIES-Edge higher in Asia before data, ECB eyed

By Rika Otsuka

TOKYO, Feb 7 (Reuters) - U.S. Treasuries edged higher in quiet Asian trade on Thursday as investors awaited an employment report later in the day for clues on the state of the labour market.

Activity was subdued in the region as many market participants were away for Lunar New Year holidays this week. Financial markets were closed on Thursday in China, Hong Kong, Taiwan, Singapore, Malaysia and Indonesia.

Investors will be closely watching weekly data on initial jobless claims after a high-profile monthly employment report showed last week the economy shed 17,000 jobs in January, the first labour market contraction in 4-½ years.

Treasury yields, which move inversely to prices, have fallen to four-year lows due to U.S. recession fears.

Gains in Treasuries were limited as investors also awaited a policy meeting by the European Central Bank later in the day.

"Whether the ECB will follow the United States in cutting interest rates has been a focal point in the Treasury market," said Hiroki Shimazu, market economist at Mizuho Securities.

The ECB is widely expected to leave interest rates unchanged at 4 percent on Thursday despite growing calls for it to cut them and join efforts to avert a worldwide economic downturn. [ID:nL06836240]

The ECB has so far resisted following the United States in reducing official rates as inflationary pressure remains high in the euro zone.