* Boehner concedes 'Plan B' lacks enough votes to pass * Benchmark yields move away from this week's 8-week high By Lisa Twaronite TOKYO, Dec 21 U.S. 10-year Treasuries rose in Asia on Friday, with yields moving away from an eight-week high hit this week, after Speaker of the U.S. House of Representatives John Boehner conceded that his tax bill designed to help avert "the fiscal cliff" lacked the votes to pass. Boehner said late on Thursday it was now up to President Barack Obama to work with fellow Democrats in the Senate to hammer out a deficit-reduction deal that could prevent automatic spending cuts and tax hikes from taking effect next month. "The markets are likely to interpret this as signaling even tougher negotiations in coming days," Mohamed El-Erian, chief executive of bond giant PIMCO, told Reuters. Boehner had pushed a "Plan B" -- which the White House had threatened to veto -- that would have raised taxes on families with net incomes over $1 million annually while extending other tax breaks. The U.S. House of Representatives will adjourn until after Christmas. "Treasuries rose after the 'Plan B' option didn't pass," said Ayako Sera, market economist at Sumitomo Trust and Banking. "The market mood has turned pessimistic, and there's a flight to quality into fixed-income assets, ahead of the long holiday weekend." Japan's financial markets will be closed on Monday in observance of the Emperor's birthday, and many markets around the world will close on Tuesday for Christmas. Yields on 10-year Treasuries sank to 1.7561 percent on Friday in Asian trade, after dropping as low as 1.746 percent, from 1.803 percent in late U.S. trade on Thursday. Earlier this week, the 10-year yield rose to an eight-week high of 1.847 percent on rising optimism that a U.S. budget deal was close. "The quick reversal in yields was not what the markets was expecting. Some were positioning for rising yields on the conclusion of a deal, so the sharp move caught them by surprise," said a fixed-income fund manager at a European asset management firm in Tokyo. Underpinning bonds, U.S. stock index futures fell sharply. S&P 500 stock futures fell 1.6 percent, pressuring shares in Asia. MSCI's broadest index of Asia-Pacific shares outside Japan erased gains and shed 0.7 percent. On the supply side, Thursday's $14 billion auction of five-year Treasury inflation protected securities (TIPS) met strong demand, fetching a record negative yield of 1.496 percent. The U.S. Federal Reserve cancelled the sale of shorter-dated Treasury debt that was tentatively scheduled for Dec. 27 as part of the central bank's "Operation Twist" stimulus programme, the New York Fed said on its website on Thursday, as the sale was "no longer necessary." On Thursday, the Fed bought $1.73 billion of Treasuries maturing February 2023 through February 2031, followed by a $7.42 billion sale of its short-dated debt holdings, as part of its "Operation Twist" stimulus programme that will wind down next week. On the U.S. data front, separate reports on Thursday showed sales of existing homes jumped and manufacturing in the mid-Atlantic region improved.