Click on the picture for CNN.com's coverage of the London explosions.

NEW YORK (CNN/Money) - Treasury bonds rose Thursday but retreated from highs earlier in the session after a series of explosions on London's transportation system sent investors seeking the perceived safety of government bonds.

In currency trading, the dollar slipped against the euro and yen.

The 10-year note rose 2/32 of a point to 100-15/32, to yield 4.07 percent, relatively unchanged from late Wednesday. But the price had soared in early morning trading, sending the yield as low as 3.94 percent shortly after the attacks. Treasury prices and yields move in opposite directions.

The 30-year bond added 4/32 of a point to 116-6/32 to yield 4.32 percent, down slightly from 4.33 in the previous session.

In shorter-dated government debt, the five-year note gained 3/32 to yield 3.84 percent and the two-year note added three ticks to yield 3.73.

The blasts that occurred on London's transportation system during rush hour renewed fears about possible terror attacks on Western interests. Investors immediately moved toward safe-haven assets and away from stocks, sending gold prices higher along with Treasuries. (Click here for more on the gold rally.)

"There is very much of a flight to quality, although by now financial markets are settling down a bit," Gerald Lucas, chief Treasury and agency strategist at Banc of America Securities, told Reuters.

Also feeding bond price gains, oil prices hit a record trading high above $62 a barrel Thursday on hurricane threats in the Gulf of Mexico. With fuel prices rising so far so fast, traders have begun regarding higher oil prices as a drag on the economy rather than an inflationary risk.

Treasury traders fear inflation because it erodes the value of their fixed asset investment.

The euro bought $1.1950, up from $1.1926 late Wednesday, while the dollar bought ¥112.01, down from ¥112.20.

But the Swiss franc rallied to a six-week high against sterling and rose more than 1 percent against the dollar following the explosions.

"The market is showing a textbook reaction, buying safe-haven currencies like the Swiss franc and euro and away from the dollar," Marios Maratheftis, currency strategist at Standard Chartered, told Reuters.

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Click here for bond charts.

-- from staff and wire reports