May 23, 2014 / 7:40 PM / 4 years ago

TREASURIES-Bond prices rise on Greece, Ukraine elections worries

* Greece, Ukraine elections spur safe-haven bids

* Strong April U.S. new home sales impact muted (Updates prices, adds fresh analyst comments)

By Sam Forgione

NEW YORK, May 23 (Reuters) - U.S. Treasuries prices rose on Friday on uncertainty ahead of Sunday’s European Union and Ukraine elections, which overshadowed stronger-than-expected U.S. housing data and spurred safe-haven bids.

Traders sought safe-haven bonds on the belief that the elections could result in market volatility, including renewed worries of a Greek exit from the euro zone and the potential for greater geopolitical concerns surrounding Russia and Ukraine.

“(Russian President) Putin doesn’t see the Ukraine government as legitimate, therefore there’s a possibility that Putin might not see the elections as legitimate,” said Michael Wallace, global market strategist at Action Economics in San Francisco.

Traders also said there was a risk that, if Greece’s leftist Syriza party wins, its leaders could reject the government’s austerity policies and threaten to leave the euro zone.

The European Union’s parliamentary election kicked off on Thursday. Greece’s leftist Syriza party performed strongly in key races in the first round of local elections on May 18. [ID: nL6N0O40XA]

Data showing that sales of new U.S. single-family homes rose more than expected in April failed to derail safe-haven demand for Treasuries.

The Commerce Department said new U.S. single-family home sales increased 6.4 percent to a seasonally adjusted annual rate of 433,000 units, ending two straight months of declines. March’s sales pace was revised up to 407,000 units from a previously reported 384,000 units.

A decline in new home sales in the U.S. Northeast suggested, however, that the rebound in the economy after a harsh winter has not been as solid as many had hoped, said Wallace.

Traders also focused on the European Central Bank’s policy meeting on June 5, where policymakers could decide to cut interest rates further to stop the euro from rising and inflation from falling any further.

“We know the ECB is going to be easing in some measure,” said Eric Green, global head of rates and FX research at TD Securities in New York. He said the likelihood of lower interest rates on international government bonds such as German bunds has made U.S. Treasuries yields more attractive.

U.S. Treasuries are “a table-pounding strong buy in a world starved for yield,” Green said.

Treasuries prices held their gains throughout the day, partly because of reluctance to make bets ahead of the holiday weekend, traders said. U.S. financial markets will be closed on Monday for the Memorial Day holiday.

Prices on 30-year Treasury bonds were last up 18/32 to yield 3.398 percent, from a yield of 3.429 percent late Thursday. Benchmark 10-year U.S. Treasury notes were last up 5/32 to yield 2.536 percent, from a yield of 2.555 percent late Thursday.

On Wall Street, the S&P 500 last traded up 0.44 percent, boosted by the U.S. housing data. (Reporting by Sam Forgione; Editing by Dan Grebler)

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