* Concerns about large Portugal bank spur bids for bonds
* Longer-dated U.S. yields fall to 5-week lows
* Stocks trimming initial losses limit bond market gains
* Relatively weak auction of $13 billion of 30-year bonds
(Updates market action, adds quote)
By Richard Leong
NEW YORK, July 10 U.S. Treasuries prices rose on
Thursday, with benchmark yields falling to their lowest in five
weeks as investors scrambled for low-risk bonds on worries that
problems involving Portugal's biggest listed bank may rekindle
the region's financial woes.
The bond market clung to modest gains following the minutes
on the Federal Reserve's June 17-18 policy meeting released on
Wednesday, which suggested the central bank is unlikely to raise
policy rates until the second half of 2015.
Demand for Treasuries has been underpinned by the global
drop in stock prices, which reduced their initial steep drop and
held bonds' gains in check.
Weak overseas economic data and intensified fighting between
militants in Gaza and the Israeli military have also fed this
week's bids for U.S. Treasuries.
The jump in bond prices likely tempered bidding at the $13
billion auction of 30-year Treasuries, the last leg of this
week's $61 billion in fixed-rate government debt supply, traders
"There's a lot of reasons to find comfort in Treasuries
right now," said Mike Lorizio, head of Treasuries trading at
John Hancock Asset Management in Boston.
Benchmark 10-year notes were up 1/32 in price
with a yield of 2.539 percent, down 0.6 basis point from
Wednesday, while prices on 30-year bonds ended 6/32
lower after the relatively weak auction, yielding 3.372 percent,
up 1 basis point on the day.
Earlier, 10-year and 30-year yields fell to five-week lows
at 2.494 percent and 3.323 percent, respectively, following
news of financial irregularities involving Espirito Santo
International, the largest holder of Portugal's Banco
Major U.S. stock indexes were stuck in negative territory
but came back from their earlier lows. The S&P 500 was
down 0.4 percent after falling as much as 1 percent. Top
European stocks closed 1 percent lower, while Tokyo's Nikkei
fell 0.6 percent.
"We saw some reversal in flight-to-quality trades in bonds
in the afternoon," said Brian Smith, a bond trader at TCW in Los
Earlier, disappointing French and Italian economic data
compounded worries about the overall euro zone economy, spurring
bets on aggressive action from the European Central Bank.
With concerns about economic weakness overseas and fighting
in the Middle East, traders have brushed off more encouraging
signs about the U.S. economy.
The U.S. Labor Department said on Thursday the number of
Americans filing for unemployment benefits for the first time
unexpectedly fell to 304,000 last week, one of the lowest weekly
readings since before the 2007-2009 recession.
(Reporting by Richard Leong; Editing by Meredith Mazzilli and