* Positive U.S. economic data support Treasury yields
* Geopolitical tensions prevent sell-off
By Gertrude Chavez-Dreyfuss
NEW YORK, July 16 U.S. benchmark Treasury yields
edged higher for a third straight session on Wednesday, boosted
by yet another piece of data suggesting the world's largest
economy is on solid footing.
U.S. 10-year yields hit the day's highs following a report
that showed U.S. producer prices rose more than expected in June
with gains across most categories.
The Labor Department said on Wednesday its producer price
index for final demand increased 0.4 percent, reversing May's
0.2 percent decline. Economists polled by Reuters had forecast
prices received by the nation's farms, factories and refineries
rising 0.2 percent.
"This morning when we came in, the market has been selling
off a little bit and the PPI was sort of the nail in the
coffin," said David Keeble, global head of interest rates
strategy at Credit Agricole in New York. "The moment the PPI
came out, the drop extended the small one that we had already
In mid-morning trading, the benchmark 10-year U.S. Treasury
note was down 1/32 in price to yield 2.554 percent,
slightly up from 2.554 percent late on Tuesday. The 30-year bond
was also down 1/32 in price, to yield 3.368 percent.
U.S. industrial output also increased 0.2 percent in June,
while U.S. homebuilder sentiment rose in July to a six-month
high, further evidence the economy was improving steadily.
Still, there has been some support for Treasuries, given
tensions in the Middle East and uncertainty surrounding
Portugal's largest listed bank, Banco Espirito Santo.
Israel on Wednesday urged the evacuation on Wednesday of
several Gaza Strip areas where more than 100,000 people live,
threatening ground operations after briefly holding fire under
an Egyptian truce proposal that failed to stop Palestinian
rocket salvoes. [ID;nL6N0PR0TR]
In Portugal, Portuguese bond yields fell on Wednesday, with
investors more optimistic that BES can deal with the financial
troubles faced by its founding family. But uncertainty remained
high with respect to the Portuguese bank.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by James