* NATO says Russian troops massing at Ukraine border
* Ten-year yield touches lows not seen since May
(Recasts and adds quotes, late prices)
By Michael Connor
NEW YORK, Aug 6 U.S. Treasuries prices got a
strong lift on Wednesday from rising tensions over Ukraine that
stung global financial markets but they ended with just modest
gains as Wall Street steadied after a selloff.
Benchmark 10-year notes, whose yield struck a
two-months low on Wednesday after trading over 2.50 percent on
Tuesday, were up 3/32 in price to yield 2.47 percent. The issue
earlier had yielded as little as 2.43 percent, a level last seen
on May 28, according to Reuters data.
Thirty-year Treasury bonds were up 2/32 in price
to yield 3.27 percent after touching a high on Tuesday of 3.33
percent during trading shaped by bullish U.S. economic data. Its
highest yield on Wednesday was 3.29 percent.
"We are entering a phase of equity market weakness and that
is despite decent earnings and decent economic news," said Dan
Heckman, senior fixed income strategist at U.S. Bank Wealth
Management. "We are seeing a flight to safety bid in Treasuries
and other bond markets around the world."
Investor concerns about the timing of Federal Reserve
interest-rate hikes were receding, with fat differentials
between European and U.S. yields proving increasingly alluring,
portfolio managers said.
"The market is not so much, 'Oh my God, the Fed will be
raising rates soon.' That is now off the table for a while,"
said Wilmer Stith, co-manager of the Wilmington Broad Market
Bond fund in Baltimore, Maryland.
"Russia possibly being more aggressive over Ukraine is now
on the table," Stith said. "U.S. Treasuries are very attractive
on a yield basis with German 10-year bonds at 1.1 percent and
ours now at 2.44."
After NATO said Russian troops were massing near Ukraine's
border, European stocks fell 0.8 percent, while MSCI's
world equity index was down 1 percent.
Wall Street indices were up modestly in trading shaped by
bargain hunting and disappointment over the collapse of two
pending corporate merger offers.
German 10-year bond yields fell 8 basis points
to a record low of 1.092 percent, their biggest daily drop since
Yields on lower-rated peripheral bonds rose after data
showed Italy, the bloc's third-largest economy, had unexpectedly
slipped back into recession.
(Reporting By Michael Connor in New York; Editing by Nick