| NEW YORK
NEW YORK Treasury debt prices fell on Wednesday, giving back much of the previous day's gains as diminished worries over Europe's fiscally troubled countries and new Treasury supply weighed on the market.
European Central Bank Executive Board member Benoit Coeure helped ease concerns over Europe's debt crisis by saying the ECB still had its bond-buying program as an option to employ. This helped damp demand for safe-haven U.S. Treasuries.
Analysts said the drag could continue into Thursday, when the U.S. Treasury Department will hold the week's final auction, a sale of 30-year bonds.
"Typically the bond supply is somewhat problematic for the street to digest," said Charlie Parker, co-head of U.S. Treasury trading at Barclays Capital in New York.
Parker said Wednesday's stock rally, which pushed U.S. indexes higher by around 0.75 percent each, also added to the pressure on Treasury prices.
The U.S. government's $21 billion offering of 10-year debt on Wednesday came largely in line with market expectations but some data within the auction results suggested weak demand, which was not surprising after bonds rallied back to expensive levels in the wake of last month's sell-off.
Treasuries could remain under pressure on Thursday due to the government's $13 billion offering of 30-year bonds, but continuing worries over Spain's debt problems and slowing global growth are likely to provide a supportive environment after this week's supply passes.
Wednesday's focus on Europe was a reminder of the tensions that gripped markets late last year and early in 2012, and kept attention on how policymakers will respond if the euro zone's crisis flares up again.
"I think that there's just a sense that central banks will step in if declines in stocks get too precipitous," said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.
"The auction helped with the little declines in Treasuries. It was kind of lackluster. There are people who just don't like a 2 percent yield on 10-year notes."
The benchmark 10-year note was last down 12/32 in price, yielding 2.03 percent. That was after the yield on 10-year fell to 1.96 percent on Tuesday, its lowest since early March.
Prices on the 10-year note edged slightly lower after the auction results were announced, sending yields briefly up to the day's high of 2.05 percent.
The 30-year bond was last off 1-3/32 in price and yielding 3.19 percent, up from 3.13 percent at Tuesday's close.
Barclays' Parker said the 30-year yield could be bid 3 or 4 basis points higher than its current level in Thursday's auction. He said if price losses continued for long bonds, 10-year notes would also cheapen further, with their yields increasing by another 2 or 3 basis points in the open market.
The market showed little reaction to a report by the Federal Reserve that showed the U.S. economy kept growing moderately in the late winter months but rising prices for gasoline and other energy products were beginning to worry producers and consumers across the country.
(Additional reporting by Burton Frierson; Editing by)