Treasury prices rose Thursday after government reports indicated the economy remains under pressure, lowering chances that the Federal Reserve will be able to raise interest rates in the near term.There has been speculation in recent weeks that the central bank might begin to tighten interest rates toward the end of the year if its push to boost the economy is successful. Bond traders saw Thursday's data as a sign that the economy remains sluggish. The Labor Department said the number of laid off-workers applying for jobless benefits rose last week by 6,000 to 371,000 — near the average analyst forecast. That suggests that the labor market remains weak but in check.

The Philadelphia Federal Reserve said regional manufacturing activity is contracting in May at a slower pace than in April, and at a milder clip than analysts expected. But the Fed said nationwide industrial output sank for the second straight month in April by 0.7 percent, due to big cutbacks in the automotive and other manufacturing industries. The drop was more than double analysts' average prediction.



Meanwhile, Federal Reserve Chairman Ben Bernanke said in a speech in Chicago he remains "encouraged" by recent efforts by banks to raise cash. The Fed has been using tools, such as opening its discount window and lending directly to investment banks, to help relieve the credit crisis.

The benchmark 10-year Treasury note rose 26/32 to 100 14/32 and yielded 3.82 percent, down from 3.92 percent late Wednesday, according to BGCantor Market Data. Bond prices move in the opposite direction of yields.

The 30-year long bond rose 1 1/32 to 97 2/32 and yielded 4.55 percent, down from 4.62 percent late Wednesday.

The 2-year note added 7/32 to 99 14/32 and its yield fell to 2.42 percent from 2.52 percent.

In late trading, the 10-year yield and the 30-year yield were unchanged from the regular session, while the 2-year yield inched up to 2.43 percent.

The 3-month Treasury bill's yield rose to 1.83 percent from 1.82 percent late Wednesday, while its discount rate rose to 1.80 percent from 1.78 percent.

"The economic data is something people have their eyes on, and become more of a factor as we go through the summer and probably into the fall," said Tom di Galoma, head of Treasurys trading at Jefferies & Co.

Predictions of a quarter-point interest rate hike by the end of the year have begun to diminish on futures markets, he said. The November contract priced a 42 percent chance for an increase, and that was down from about 60 percent earlier in the week.

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