Bonds dip on stock rally

NEW YORK (CNNMoney.com) -- Bond prices fell Monday as U.S. stocks surged while investors looked to encouraging signs from the housing market and falling oil prices.

The benchmark 10-year note slipped 5/32, or $1.56 on a $1,000 note, to yield 4.67 percent, up from 4.65 Monday.

The 30-year note fell 6/32, or $1.87 on a $1,000 note, to yield 4.85 percent, up slightly from 4.84 in the previous session. Bond prices and yields move in opposite directions.

The five-year note dipped 4/32 to yield 4.57 percent. The two-year note lost two ticks to yield 4.62.

A slide in oil prices sent U.S. stocks soaring and extended gains following the morning release of the housing market report.

Pending sales of existing U.S. homes unexpectedly rose in February, despite bad weather and weakness in the subprime lending sector that put a crimp on the housing market.

Regulatory filings Monday evening revealed accounting firm Grant Thornton resigned as auditor for two troubled subprime lenders, Fremont General (Charts), the No. 6 lender in the field in 2006, and Accredited Home Lenders Holding (Charts), the No. 15 lender.

The battered sector continues to fuel concern about the subprime lending market a day after the No. 2 subprime lender, New Century Financial, filed for Chapter 11 bankruptcy.

Oil prices for May delivery sank nearly 2 percent on the New York Mercantile Exchange after Britain and Iran said diplomacy could end the conflict regarding 15 British naval personnel held in the Gulf.

U.S. crude settled down $1.30 at $64.64 a barrel, while London Brent fell 93 cents to $67.81 a barrel following comments by British Prime Minister Tony Blair on apparent conciliatory remarks by Iran.

In currency trading, the euro bought $1.3328, down from $1.3363 on Monday. The dollar bought ¥118.87, up from ¥117.83 the previous session.

Persian Gulf hope may spur stocks