NEW YORK (CNN/Money) - Bonds rose for a third straight session Thursday on economic reports that calmed inflationary fears, while the dollar fell.

The benchmark 10-year note advanced 17/32 of a point to 96-05/32, yielding 4.48 percent, down from 4.55 percent late Wednesday.

The 30-year bond jumped 22/32 of a point to 109-05/32, to yield 4.76 percent, down from 4.80 percent late Wednesday. Bond prices and yields move in opposite directions.

The five-year note added 12/32 of a point to yield 4.17 percent, while the two-year tacked on 4/32 of a point, yielding 3.78 percent.

Earlier Thursday, the government said the personal consumption expenditure index, a favorite inflation measure of the Federal Reserve, rose in-line with expectations.

Personal consumption rose by 0.3 percent in February, above Wall Street's forecast for a 0.2 percent gain, according to the Commerce Department. But the core PCE, which excludes volatile energy and food prices, rose by only 0.2 percent, in line with expectations.

"The core PCE price index is a calming influence on the bond market," Patrick Fearon, senior economist at A.G. Edwards and Sons, told Reuters. "Inflation so far has far not gotten out of hand."

Worries about inflation have pushed the yield to the highest level in eight months when the 10-year yield hit 4.64 last week.

First-time jobless claims rose to 350,000 in the week ended March 26, up from a revised 330,000 in the previous week, the Labor Department said. Wall Street economists had forecast a drop to 320,000.

Both the jobless number and the inflation reading gave bond traders hope that inflation, which erodes the value of fixed interest-paying investments, has not gotten out of control.

The soft reports offset data showing production, new orders and employment all surging in the Midwest economy, according to the National Association of Purchasing Managers-Chicago.

The report was a surprise given recent tepid readings on the New York state and Mid-Atlantic factory sectors, so investors will closely watch Friday's national Institute for Supply Management factory report.

Volume was light ahead of the March payrolls report due out Friday, which often sets the near-term direction for bond prices.

Slower job creation could suggest that official rates are closer to a neutral level, neither stimulating nor choking economic growth.

The relatively tame reads on inflation curbed expectations that the Federal Reserve would raise interest rates more aggressively, a move that would make U.S. investments more attractive to foreign investors and boost the greenback.

The dollar dipped accordingly, buying ¥107.15, down from ¥107.53 late Wednesday. The euro bought $1.2967, up from $1.2936.

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