(Updates market action, adds quotes) By Richard Leong NEW YORK, Dec 8 (Reuters) - U.S. Treasury yields rose on Thursday in line with their European counterparts after the European Central Bank said it would trim its monthly pace of bond purchases to 60 billion euros from 80 billion euros, starting in April. ECB President Mario Draghi, however, said the unexpected move was not an outright winding-down of the central bank's quantitative easing (QE) program, as policymakers would like to see more evidence of a sustained pickup in inflation in Europe. The ECB appeared to have left the door open to further extend bond purchases and/or increase its monthly purchase pace in the event the euro zone economy faltered. Traders had worried the central bank would signal a clear path to wrap up its asset purchase program, propelling bond yields in Europe and the rest of the world higher. "Initially it was disappointing, so we saw yields back up. We have come off the highs (in yields) as we are digesting the news. The reality is that they are extending the bond purchase period to at least December," said Larry Milstein, head of U.S. government and agency trading at R.W. Pressprich & Co. in New York. "This isn't going to last forever, but they are saying we are going to keep doing this until inflation comes back," Milstein said, referring to the ECB's QE plans. The benchmark 10-year Treasury note's yield was up 5 basis points at 2.396 percent, retreating from a session high of 2.427 percent. The 10-year yield held below the 2.492 percent level reached on Dec. 1, which was its highest since July 2015, according to Reuters data. The German 10-year Bund yield was up 8 basis points at 0.429 percent. December 8 Thursday 10:06AM New York / 1506 GMT Price US T BONDS MAR7 149-26/32 -1-12/32 10YR TNotes MAR7 124-112/256 -0-96/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.4925 0.5 -0.005 Six-month bills 0.6125 0.6229 -0.005 Two-year note 99-198/256 1.1163 0.012 Three-year note 98-226/256 1.3899 0.020 Five-year note 99-158/256 1.8308 0.033 Seven-year note 99-146/256 2.1917 0.046 10-year note 96-124/256 2.3998 0.053 30-year bond 95-204/256 3.0912 0.062 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 22.25 0.00 spread U.S. 3-year dollar swap 14.50 0.00 spread U.S. 5-year dollar swap 0.25 0.00 spread U.S. 10-year dollar swap -15.25 0.25 spread U.S. 30-year dollar swap -54.00 0.25 spread (Reporting by Richard Leong; Editing by Lisa Von Ahn and Paul Simao)
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