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Bonds News

TREASURIES-U.S. bond prices rise as equities fall

* China tightens monetary policy, depressing global stocks

* Weaker growth in Europe also weighs on equities

* US Treasury Department closes out week of weak refunding (Updates market activity, adds quote)

NEW YORK, Feb 12 (Reuters) - U.S. Treasury debt prices rose on Friday as equities fell on worries about the global economic recovery after China tightened monetary policy and as investors looked forward to a week with no new supply.

With $81 billion worth of new issuance soaking in following three auctions this week, the market’s focus turned to China’s monetary tightening to prevent its economy from overheating and signs of weaker growth in Europe.

“Oftentimes when we go through a big supply period and now we’re going to have a full week with no supply and little economic data, the market just breathes a little sigh of relief and trades up,” said Raymond Remy, the head of fixed income at Daiwa Securities in New York.

A reopening of the markets in Tokyo, which were closed on Thursday for a holiday, led some analysts to conclude that Japanese buyers were also bringing support to Treasuries.

Analysts said weaker-than-expected economic growth in the euro zone for the fourth quarter along with uncertainty over the details of the European Union’s plan to aid Greece also contributed to the bid for U.S. Treasuries. For details, see [ID:nLDE61B0F4] and [ID:nLDE61B0YE]

“The market is a little frustrated right now at the lack of a resolution (on Greece),” said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.

The benchmark 10-year Treasury note US10YT=RR rose 11/32 to yield 3.69 percent, down from 3.73 percent Thursday. The 30-year Treasury bond US30YT=RR was up 11/32 to yield 4.65 percent, down from 4.67 percent on Thursday.

China said it will raise reserve requirements for its banks by 50 basis points, in a move designed to stem inflation, sparking fears that China’s monetary policy could stifle global growth. [ID:nTOE61B069]

Treasuries were little changed after U.S. retail sales for January topped forecasts. Retail sales grew by 0.5 percent, compared with a consensus estimate of 0.3 percent growth. [ID:nN11214682]

The major U.S. stock indexes were all down, with the Dow Jones industrial average .DJI and the Standard & Poor's 500 Index .GSPC both down around 1 percent. (Editing by Leslie Adler)

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