NEW YORK (CNN/Money) - Treasury prices lost ground Tuesday after the Federal Reserve raised interest rates a quarter percentage point and traders reacted to the Fed's policy statement.

The dollar held on to early gains versus the yen but fell slightly against the euro.

The benchmark 10-year note fell 3/32 to 97-16/32 to yield 4.56 percent, remaining relatively unchanged from late Monday. The 30-year bond lost 4/32 to 108-30/32 to yield 4.76 percent, also unchanged from the previous session. Bond prices and yields move in opposite directions.

In shorter-dated debt, the two-year note fell one tick, yielding 4.41 percent. The five-year note fell 2/32, yielding 4.46 percent.

Bond prices increased slightly in early trading before the Federal Open Market Committee -- the interest-rate-setting panel of the Fed -- announced a quarter-point rate increase to 4 percent.

It was the FOMC's 12th consecutive increase, a move that had been widely expected, and analysts were more interested in parsing

the wording of the Fed's statement.

In its heavily scrutinized statement, the Fed said that it would keep raising rates at a "measured" pace. That phrase is interpreted by many to signal that quarter-point increases are likely at the Fed's next meetings, on December 13 and January 31.

But as Federal Reserve Chairman Alan Greenspan's term nears its Jan. 31 end, many traders are also looking for hints from the central bank about how it will proceed with its measured pace of rate hikes following the maestro's departure. (Full story.)

Bonds started the session lower after a national manufacturing survey showed that U.S. factories sustained a robust rate of expansion in October.

The Institute for Supply Management's index of factory activity eased to 59.1 in October from 59.4 in September but surpassed forecasts for a bigger drop to 57.

Rising costs were increasingly a source of concern for manufacturers, with the survey's prices-paid measure jumping to 84 from 78 in September.

Analysts said the sort of rising price signals seen in the ISM report was certain to keep central bankers tightening monetary policy for some time to come.

An improving labor market also signaled a steady dose of interest rate hikes ahead. The ISM's employment gauge climbed to 55 from 53.1, marking the fourth straight month of job growth in the sector.

The dollar, which hit a 25-month high against the yen Monday, has rallied as higher rates in the United States have made dollar-denominated investments more attractive to foreign investors.

In currency trading, the dollar gave up some earlier gains against the yen, buying ¥116.73, up from ¥116.38 late Monday. The greenback fell slightly against the euro, which bought $1.2023, up from $1.1989 the previous session.

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