TREASURIES-Bonds recover on stocks weakness, jobs rethink

* U.S. stocks (Read more about the stock market today. ) fall, reviving safe haven bid

* Rethink about fleeting U.S. jobs relief

* Traders brace for $33 billion 3-year notes sale
(Adds analyst quote, updates U.S. stocks (Read more about the stock market today. )/Treasuries prices)

By John Parry

NEW YORK, Sept 7 (BestGrowthStock) – Treasuries rebounded on
Tuesday after three straight sessions of losses, as waning
confidence in the stock market restored a safe haven bid for
government bonds.

Investors also reassessed their initial relief about a less
somber than expected U.S. monthly jobs report on Friday.

The jobs data had momentarily assuaged fears about the risk
of a double dip recession and accelerated appetite for stocks
and other riskier assets, to the detriment of less risky
government bonds.

But U.S. stock indexes fell on Tuesday, with the Dow Jones
industrial average (.DJI: ) down 0.7 percent, after a report on
the European banking system reawakened fears about the region’s
financial health. A Wall Street Journal report raised questions
about bank stress tests carried out in the euro zone earlier in
the year.

“People have come back to work today feeling they were a
little over exuberant in the reaction to Friday’s payrolls
number. It was not as a bad as expected but certainly not a
harbinger of gangbusters economic growth going forward,” said
Thomas Simons, money market economist at Jefferies & Co in New
York.

The benchmark 10-year Treasury note’s price, which moves
inversely to its yield, rose 15/32 for a yield of 2.65 percent
(US10YT=RR: ), falling back from Friday’s three-week highs around
2.77 percent.

U.S. employment fell for a third straight month in August,
but by less than expected, while within the report, private
payrolls growth was surprisingly high. See [ID:nN03273418].

Bond markets observed a recommended close on Monday for the
U.S. Labor Day public holiday, which marks the unofficial end
of the summer. Typically, trading volumes rise in the early
part of this week.

The 30-year Treasury bond climbed 1-12/32 in price for a
yield of 3.71 percent (US30YT=RR: ), versus 3.78 percent late
Friday.

Traders were readying for a $33 billion auction of 3-year
Treasury notes scheduled for 1 p.m. The 3-year note was trading
up 2/32 in price for a yield of 0.76 percent.

“I think the auction will go well, with the the reemergence
of sovereign concerns and weaker risk markets,” said John
Briggs, U.S. Treasury strategist at RBS Securities in Stamford,
Connecticut.

Concerns about European banks in some peripheral European
countries were a key catalyst for Treasuries’ gains, Briggs
said.

Since the Federal Reserve is expected to keep official
interest rates near zero for a long period to help stoke
economic growth, shorter maturity government notes are in
strong demand, analysts say.

Auctions of $21 billion in 10-year notes and $13 billion in
30-year bonds will follow later this week.

(Reporting by John Parry; Editing by Andrew Hay)

TREASURIES-Bonds recover on stocks weakness, jobs rethink