Bonds gain on credit fears

NEW YORK (CNNMoney.com) -- Bonds rose Thursday as investors fled toward the safe haven of treasurys amid credit worries, which have dampened U.S. stocks in the past few days. The dollar fell against the euro and strengthened versus the yen.

The 10-year gained 4/32, yielding 4.77 percent, down slightly from 4.78 percent Wednesday. The 30-year rose 4/32, or $1.25 on a $1,000 bond, to yield 4.91 percent, down slightly from 4.92 percent in the previous session. Bond prices and yields move in opposite directions.

The 5-year rose 3/32, yielding 4.61 percent. The 2-year gained one tick yielding 4.57 percent.

Although the Dow finished 100 points higher Thursday, subprime and credit market fears still remained prevalent.

Adding to a string of bad news within the mortgage lending sector, Accredited Homes raised concerns about its ability to stay in business and a bond insurer said delinquencies in some subprime mortgages serviced by Countrywide Financial Corp were rising.

"Whenever you see credit concerns, the [bond] market goes up," Carl Lantz, interest rate strategist at Credit Suisse in New York, told Reuters.

In economic news, the weekly initial jobless claims figure released Thursday morning rose a mere 4,000, under economists' expectations. The number highlighted underlying strength in the economy.

Factory orders for June rose by a less-than-expected 0.6 percent in June and fell somewhat once the volatile transportation component was stripped away, according to a report.

Analysts polled by Reuters expected orders to mount 1.0 percent in June from an unrevised 0.5 percent fall the previous month.

In currency trading, the euro bought $1.3702 up from $1.367. The dollar bought ¥119.18, up from ¥118.79.

-- from staff and wire reports