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TREASURIES-Bonds prices little changed, ECB weighed

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Published: Thursday, 7 Feb 2013 | 9:52 AM ET
By: Luciana Lopez

* ECB'S Draghi seen less hawkish than expected

* U.S. jobless claims higher than expected, but labor market healing

* Spanish debt sees strong demand as yields below crisis level

NEW YORK, Feb 7 (Reuters) - Prices for U.S. Treasuries traded near flat on Thursday as investors weighed less-optimistic-than-expected comments from the head of the European Central Bank against strong demand for Spanish debt. While U.S. data pointed to healing in the labor market, with a drop in the number of Americans filing new claims for jobless benefits last week, the data was secondary to developments abroad, analysts said. Given that European economic data had a relatively good run recently, people "were expecting a little more hawkishness than they received from the head of the ECB," said Ian Lyngen, senior government bond strategist at CRT Capital LLC in Stamford, Connecticut. "U.S. economic data took a backseat this morning as the world focused on global monetary policy," Lyngen said.

ECB President Mario Draghi said at a news conference that "the economic weakness in the euro area is expected to prevail in the early part of 2013." However, Spain sold more debt than planned and demand was similar to that seen at strong auctions in January, indicating investors. Despite lower prices for the bonds, yields were still only a fraction of their levels at the height of worries about Spain's economy. The 10-year Treasury note last traded flat to yield 1.964 percent. The 30-year bond last traded down 1/32 in price to yield 3.174 percent, from 3.1703 percent late on Wednesday. U.S. bond prices have stabilized this week after a sharp sell-off. However, options traders in U.S. Treasuries futures and in exchange-traded funds that track the moves in long-dated Treasuries have been betting on lower bond prices and higher yields. Initial claims for state unemployment benefits dropped by 5,000 to a seasonally adjusted 366,000, the Labor Department said. That was higher than anticipated. A separate report showed U.S. nonfarm productivity fell in the fourth quarter by the most in nearly two years as output increased only marginally despite steady gains in employment.

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NEW YORK, Feb 7- Prices for U.S. Given that European economic data had a relatively good run recently, people "were expecting a little more hawkishness than they received from the head of the ECB," said Ian Lyngen, senior government bond strategist at CRT Capital LLC in Stamford, Connecticut. "

   
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