* U.S. 30-year yield poised for biggest 4-day rise in 3
* U.S./German 2-year yield gap widest since 2007 after ECB
* Third busiest 2014 week for U.S. corporate bond supply-IFR
* Focus shift to U.S. payrolls data, ceasefire talk in Minsk
(Updates market action, adds quote)
By Richard Leong and Daniel Bases
NEW YORK, Sept 4 U.S. Treasuries yields rose on
Thursday after the European Central Bank surprised investors
with a bold plan to help the sagging euro zone economy, while
stronger U.S. economic data supported views the Federal Reserve
may raise interest rates in mid-2015.
Amid the market sell-off, bargain-minded investors sat on
the sidelines ahead of Friday's U.S. August payrolls data and
scheduled talks in Minsk aimed at ending a five-month war
between Ukraine and pro-Russian separatists.
"We are seeing pretty good domestic economic news. The ECB
is getting more aggressive with its policy action," said Andrew
Richman, fixed income strategist at SunTrust Private Wealth
Management in Palm Beach, Florida.
A surprise shrinkage in the U.S. trade deficit in July and a
services industries index hitting a 6-1/2 year peak, together
with jobless claims and private job growth data, led some
analysts to raise their economic outlook.
The data compounded early selling from the ECB's unexpected
cut in its policy rate to a record low of 0.05 percent.
In addition to lower rates, the ECB also introduced plans to
buy asset-backed securities and covered bonds in a bid to loosen
credit in the 18-nation block. Sources told Reuters it could
amount to 500 billion euros ($650 billion) over three years.
The yield gap between U.S. two-year Treasuries and German
Schatz grew to 0.60 percent on Thursday,
the widest since May 2007.
Longer-dated Treasuries yields, which had fallen on
safe-haven demand due to the fighting in eastern Ukraine, rose
more than their shorter-dated counterparts.
The benchmark 10-year Treasuries yield rose 4
basis points to 2.450 percent, just a tad below the 2-1/2 week
high set on Wednesday. It hit a 13-month low at 2.303 percent in
The 30-year yield rose to 3.209 percent, up more
than 5 basis points from Wednesday and up 14 basis points in
four days, the most in such a time span in three months.
Competition from U.S. corporate bonds also spurred selling
in Treasuries. Investment-grade banks and companies have raised
$39 billion in the past two days, putting the sector on track
for its third busiest week of 2014, according to IFR, a unit of
Looking ahead, an August payroll increase in line with
forecasts on Friday might not cause another round of selling in
Treasuries, said Jennifer Vail, head of fixed income research at
U.S. Bank Wealth Management in Portland, Oregon.
Since the spring, benchmark yields have typically risen in
the days preceding the monthly payrolls report and would fall
the rest of the month.
"We are probably going to repeat the pattern. I don't expect
a blowout report," Vail said.
(Reporting by Richard Leong; Editing by Tom Brown and Dan