NEW YORK (CNNMoney.com) - Bond prices fell for a second straight session Thursday as investors focused on signs of rising inflation.

The dollar edged higher against the euro and the yen.

The 10-year Treasury lost 4/32 to 95-26/32 to yield 5.04 percent, up from 5.03 percent late Wednesday. The benchmark yield surpassed the 5 percent mark for the first time since June 2002 last Thursday. Bond prices and yields move in opposite directions.

The benchmark Treasury yield has jumped nearly three quarters of a percentage point in the past three months as investors have bet the Fed might raise short-term rates more than originally expected.

The 30-year bond fell 7/32 to 90-9/32 to yield 5.14 percent, up from 5.13 the previous session.

The five-year note slipped 3/32 to yield 4.92 percent. The two-year note fell one tick, yielding 4.89 percent.

Inflation was on the mind of investors Thursday as they took in a weekly report on jobless claims that suggested more tightening in the labor market and a regional manufacturing report that showed upward pressure on prices.

The government said new claims for jobless aid fell by a more-than-expected 10,000 last week -another sign of the strong employment market. Some economists worry that a tight labor market will result in higher wages and price pressures.

Meanwhile, the prices paid index of the Philadelphia Federal Reserve Bank's April business survey - a key inflation measure - climbed to 29 in April from 17.2 in March, as commodity prices surged.

The overall business activity index inched up to 13.2 in April from 12.3 in March, a touch below Wall Street estimates of 14.0. (Full story.)

Investors seemed to focus on the inflation worries, even as a separate report suggested slowing economic growth.

The Conference Board said its index of leading economic indicators, which is aimed at forecasting future economic activity, fell 0.1 percent in March after declining a downwardly revised 0.5 percent in February.

Bond traders hate inflation since it erodes the value of their fixed-interest paying investments.

In currency trading, the euro bought $1.2314, down a shade from $1.2319 late Wednesday, while the dollar bought ¥117.57, up from ¥117.33 the previous session.

--from staff and wire reports

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