NEW YORK (CNN/Money) - Investors snapped up safe-haven U.S. Treasurys Thursday as new corporate profit warnings dovetailed with reports showing weak labor markets, a drop in housing starts, and sluggish factory growth.

Around 4:30 p.m. ET, two-year notes were up 3/32 to 100-10/32, giving a yield of 1.95 percent, versus 2 percent at Wednesday's close. Five-year notes were up 7/32 at 101-24/32, taking yields to 2.83 percent from 2.92 percent at Wednesday's close.

The 10-year note was up 11/32 to 104-23/32, yielding 3.80 percent, versus 3.84 percent at Wednesday's close. The 30-year bond gained 7/32 to 109-29/32 for a yield of 4.74 percent against 4.75 percent at Wednesday's close.

Heavy selling in stocks worldwide and the steady drumbeat of rhetoric on a possible U.S. military action in Iraq also whetted investors' appetite for government debt, pushing yields on 10-year Treasury notes to new four-decade lows.

A grim profit warning late Wednesday from computer services company Electronic Data Systems Corp. halved its stock price and slammed shares of rivals such as International Business Machines Corp. (IBM: Research, Estimates).

EDS (EDS: Research, Estimates), second only to IBM in the global computer services sector, said spending on its services had virtually stopped. Its blunt warning fueled persistent worries over the slow pace of corporate profit growth.

"Every day another company comes out and says their earnings are going to be less than we originally thought. So right now everybody wants to be in fixed income," said Marcello Frustaci, bond trader at Mizuho Securities.

But volumes were thin, traders cautioned, with very few securities changing hands by mid-afternoon.

Early in the session, the U.S. Labor Department reported weekly jobless claims totaled 424,000 for the week ended Sept. 14, higher than the 414,000 claims economists in a Reuters poll had forecast, but down from 433,000 in the prior week.

Claims have remained above 400,000 for the past four weeks, a level above which is usually associated with a rise in the overall unemployment rate and no jobs growth.

Separately, the Commerce Department said housing starts fell by 2.2 percent in August, suggesting the housing market -- a pillar of strength during the recession and the economy's fitful recovery -- could be faltering.

And the Federal Reserve Bank of Philadelphia, which serves the U.S. mid-Atlantic region, said its September regional business conditions index rose to 2.3 compared with -3.1 in August. But that number was barely above the zero cut-off between growth and contraction, showing sluggish expansion.

Taken together, the reports underscored a sluggish recovery, despite some forecasts for as much at 4 percent gross domestic product (GDP) growth in the third quarter. At the margin, they also raised the odds that the Fed could move to cut short-term interest rates, already at four-decade lows, before year's end.

The U.S. dollar fell against most major currencies as declining U.S. share prices and weak economic data counterbalanced pessimism about Europe and Japan.

The greenback was hurt by reports showing continued U.S. economic weakness. U.S. housing starts fell 2.2 percent in August, the third consecutive monthly decline and beyond what analysts had expected. Weekly jobless claims, though lower, were still higher than market expectations.

Around 4:30 p.m. ET, the euro was trading up 0.46 percent at 98.21 cents after rising as high as 98.30 cents, and the greenback slipped 0.2 percent versus the yen to ¥121.56.

Overnight, the yen faced selling as skepticism grew over the Bank of Japan's plan to shore up Japan's banking system.  

-- from staff and wire reports