Treasury prices fall after upbeat economic news drives investors back into stock market

By JOE BEL BRUNO | AP Business Writer

5:55 PM EDT, August 28, 2008

NEW YORK (AP) _ Treasury bonds mostly fell Thursday after a government report indicated the economy grew at a faster pace during the second quarter and at least temporarily eased investors' need for safe-haven bets.

The Commerce Department reported that gross domestic product, helped by growth in U.S. exports, rose more than economists had expected during the April to June period, rising at a 3.3 percent annual rate.

Treasurys also fell after the Labor Department said the number of newly laid off workers seeking jobless benefits fell for the third straight week. Both reports gave investors some reassurance that the economy is holding up, and that diminished the appeal of the relative safety of government debt.

Bonds fell during a session in which the Dow Jones industrial average climbed more than 200 points.

In late trading, the 10-year Treasury note fell 4/32 to 101 25/32. Its yield rose to 3.79 percent from 3.77 percent late Wednesday, according to BGCantor Market Data. Yields move in the opposite direction from prices.

The 30-year long bond rose, largely due to technical trading. It gained 3/32 to 101 31/32 while its yield fell to 4.38 percent from 4.39 percent on Wednesday.

The 2-year note fell 27/32 to 100, and yielded 2.37 percent, up from 2.29 percent late Wednesday.

The 3-month Treasury bill's yield was 1.72 percent compared with 1.65 percent late Wednesday, and its discount rate was 1.70 percent, compared with 1.63 percent.