* ECB's Draghi sounds less hawkish than expected
* U.S. jobless claims higher than expected, but labor market
* Spanish debt auction draws strong demand
By Ellen Freilich
NEW YORK, Feb 7 Prices for U.S. Treasuries rose
on Thursday as investors bought safe-haven U.S. debt after the
head of the European Central Bank noted the risks facing the
euro zone economy, cooling investors' fervor for riskier
Treasuries rose as stocks and the euro fell after European
Central Bank chief Mario Draghi said risks to the euro zone
economy were to the downside and that economic weakness in the
euro zone will likely prevail in coming months.
"We've had this 'risk on' tone since the offset of the year
and ... a little bit of risk (is) coming off the table," said
Sean Murphy, Treasuries trader at Societe Generale in New York.
"Europe is keeping a lid on yields," said James Camp,
managing director of fixed income at St. Petersburg,
Florida-based Eagle Asset Management.
U.S. data pointed to healing in the labor market, with a
drop in the number of Americans filing new claims for jobless
benefits last week, but the report was overshadowed by
developments abroad, analysts said.
The more cautious approach to riskier assets did not seem to
hurt demand in an auction of Spanish sovereign debt. Spain sold
more debt than planned. The strong demand indicated ongoing
investor interest in peripheral debt.
The 10-year Treasury note last traded up 3/32 in
price to yield 1.953 percent.
The 30-year bond last traded up 2/32 in price to
yield 3.164 percent, from 3.16 percent late on Wednesday.
"We've had a decent selloff in Treasuries so we're going to
bounce around these levels for a time until something comes
along to change our views," said Matt Duch, portfolio manager at
Calvert Investments in Bethesda, Maryland.
U.S. bond prices have stabilized this week after a sharp
Options traders in U.S. Treasuries futures and in
exchange-traded funds that track the moves in long-dated
Treasuries have been betting on lower bond prices and higher
Most most analysts expect any upward trend in yields to be
Initial claims for state unemployment benefits dropped by
5,000 to a seasonally adjusted 366,000, the Labor Department
said. Economists polled by Reuters had expected 360,000 claims.
A separate report showed U.S. nonfarm productivity fell in
the fourth quarter by the most in nearly two years as output
increased only marginally despite steady gains in employment.