TREASURIES-Prices climb on rekindled credit fears

By Richard Leong

NEW YORK, May 9 (Reuters) - Renewed credit concerns spurred U.S. government debt prices higher on Friday, as a safe-haven flight into Treasuries from stocks sent benchmark 10-year notes to their best week since mid-March.

Doubts over a recovery in credit markets resurfaced this week with financial companies reporting a fresh wave of write-downs and losses stemming from subprime mortgages.

Late Thursday, American International Group (AIG.N: Quote, Profile, Research), the world's largest insurer, recorded a record loss.

Credit fears have dragged equity markets from their recent peak, and benchmark 10-year Treasury yields from their four-month high set earlier this week.

U.S. stock opened lower following a 2 percent drop in Tokyo and Europe. See [.N]

"Stocks rolling over a bit in Asia and Europe have driven bond prices higher," said Thomas di Galoma, head of government trading at Jefferies & Co. in New York.

Ten-year note's yield <US10YT=RR>, which moves inversely to its price, last traded at 3.74 percent, down from 3.78 percent late on Thursday. It briefly moved above 3.95 percent just two days ago.

Another positive factor for Treasuries was the some $70 billion investors received on maturing U.S. government bonds from the Treasury quarterly refunding this week.