NEW YORK (CNN/Money) - U.S. Treasury prices inched lower Friday as investors secured profits from the recent bond rally after oil prices fell more than a dollar to below $48 a barrel.
The benchmark 10-year note shed 3/32 to 100-5/32 to yield 4.23 percent, up from 4.21 percent late Thursday, and the 30-year bond held at 105-2/32 to yield 5.02 percent.
The two-year note fell 1/16 of a point to 100-19/32 to yield 2.43 percent, and the five-year bond dropped 5/32 to 100-12/32 to yield 3.41 percent.
Crude oil prices had previously jumped above $49 a barrel amid continued fighting in the Iraqi holy city of Najaf, but they dropped on profit-taking and conflicting reports that the fighting may be coming to an end.
Soaring oil prices typically lead to inflation, and concerns about its impact on the economy have been rising.
Indeed, the No. 2 U.S. airline, United Airlines, said Friday that the oil price spike is adding more than $1 billion to its 2004 expenses.
Still, "there is concern that trade is beginning to wear down, with bonds getting less and less mileage out of strength in oil as the latter approaches $50 a barrel," Michael Cartine, analyst at IFR Markets, told Reuters.
"Buyers have clearly not been willing to chase the market to its highs," he said.
On the economic side, the Economic Cycle Research Institute's weekly leading index, released on Friday, edged up to 131.7 from 131.4, but the index's annualized growth rate held at 0.0.
"Despite the general eagerness to declare that the soft patch is behind, the return to robust growth is nowhere in sight," said Anirvan Banerji, ECRI research director.
In the currency market, the dollar gained against the euro and held its ground against the yen. The euro bought $1.2311, down 0.4 percent after having dipped as low as $1.2279 earlier in the session. The dollar was flat at ¥109.37.
--from staff and wire reports
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