NEW YORK (CNN/Money) - Treasury prices climbed Thursday afternoon after a regional business survey showed a slump in growth, possibly heralding an economic slowdown.

The dollar was mixed against the euro and yen.

The benchmark 10-year note rose 10/32 to 100-10/32 to yield 4.07 percent, down from 4.10 late Wednesday.

The 30-year bond gained 24/32 to 115-17/32 to yield 4.36 percent, down from 4.41 the previous session. Treasury prices and yields move in opposite directions.

The five-year edged up 5/32, yielding 3.85 percent while two-year notes ticked up to yield 3.69 percent.

After lower trading Thursday morning, bonds turned up after the Philadelphia Federal Reserve bank said its business activity index slumped to minus 2.2 in June from 7.3 in May, the index's first negative reading in 25 months.

Not only did the report signal that U.S. economic growth could be slowing, it indicated that inflation was not a problem in the region.

Low inflation tends to help bonds, as it boosts the value of the fixed-income investment.

Contraction in the highly industrialized mid-Atlantic region took many traders by surprise because a separate Empire State survey of New York factories released Wednesday was much stronger than expected.

"It seems the New York and the Philly Fed index did a bit of a role reversal: New York was very weak last month and bounced back this month, and there was the opposite pattern with Philly," Jay Feldman, an economist at Credit Suisse First Boston in New York told Reuters.

Given that the Philly Fed survey is widely regarded as the most reliable of the regional manufacturing surveys, bond investors are now wondering whether the regional weakness will be reflected in June national factory data due early next month.

Treasury prices fell earlier in the session as investors digested the latest jobless claims and housing start reports, and the Fed's Beige Book report released on Wednesday. In the report, the Fed said the economy grew from mid-April through May and that overall price pressures were moderate, though some regions reported rising costs for fuel and building materials.

Bond prices have dipped recently after Fed Chairman Alan Greenspan made comments last week that led investors to belive that the central bank would continue to raise short-term rates, despite some signs of a slowdown in the economy.

Thursday afternoon, Kansas City Federal Reserve Bank President Thomas Hoenig echoed Greenspan's comments, noting that the federal funds rate lies between 3.5 percent and 4.5 percent. The fed funds rate, which banks use to determine the interest they charge for loans, now stands at 3 percent.

"In that context we would, I think, in the long term want to be somewhere within that range. And as the economy has grown well, we want to be in that range sooner rather than later," he told the Wichita Area Bankers Forum in a speech.

In currency trading, the euro fell against the dollar, buying $1.2101, down from $1.2118 late Wednesday, while the dollar fell against the yen, fetching ¥108.96, down from ¥109.19.

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-- From staff and wire reports.