Treasurys advance on more financial worries

Prices of Treasury bonds advanced Monday as investors sought the safety of government securities amid worries about the credit crisis' impact on the financial sector.

There continued to be concerns after reports that Korean Development Bank might be reconsidering a possible bid for embattled investment bank Lehman Brothers Holdings Inc. Meanwhile, AIG was the steepest decliner among the 30 stocks that make up the Dow Jones industrials after Fitch Ratings warned Friday that it might cut its ratings on the insurer.

The financial sector has struggled as some homeowners have fallen behind on mortgage payments. A report Monday by a trade group for real estate agents showed that the number of unsold properties reached an all-time high in July. Defaults on mortgages have depressed the value of securities backed by the loans, causing major global banks to write down more than $300 billion of losses.

In midday trading, the 10-year Treasury note rose 26/32 to 101 27/32. Its yield fell to 3.77 percent from late Friday's yield of 3.87 percent, according to BGCantor Market Data. Yields move in the opposite direction from prices.

The 30-year bond rose 1 14/32 to 101 31/32. Its yield fell to 4.38 percent from 4.47 percent late Friday.

The 2-year note rose 6/32 to 100 26/32, and yielded 2.32 percent, down from 2.41 percent.

Treasury bonds declined Friday after Federal Reserve Chairman Ben Bernanke said inflation pressures are likely to moderate, which would lessen the need for an interest rate hike.

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