September 7, 2017 / 7:53 PM / 2 months ago

TREASURIES-Yields tumble on hurricane woes, ECB

* ECB weighs on Treasury yields

* Hurricane Harvey drives spike in jobless claims

* U.S. long-dated yields fall to 10-month troughs (Adds comment, updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, Sept 7 (Reuters) - U.S. long-dated Treasury yields fell to 10-month lows on Thursday as U.S. jobless claims data and worries about the impact of hurricanes Irma and Harvey on the world’s largest economy stoked safe-haven demand for government debt.

U.S. two-year yields were also lower, sliding to their lowest since mid-May.

Rates were further pressured overall by declines in German government bonds after the European Central Bank lowered its inflation forecast to reflect a surging euro.

Germany’s benchmark 10-year bond yield fell almost 3 basis points to 0.31 percent, its lowest since late June.

“There has been bullish momentum in Treasuries, with yields declining all week,” said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco.

Rupert said there were several factors that led to the decline in yields, such as the ECB’s comment and its accommodative posture.

“The hurricanes are also there and they have many divergent effects (so) that it’s difficult to figure out what’s going to happen. So far, they’re pressuring the financial sector because of the insurers,” she added.

Hurricane Irma, one of the most powerful storms to hit the Atlantic in a century, was on track to reach Florida on Saturday or Sunday, becoming the second major hurricane to hit the U.S. mainland in as many weeks.

Hurricane Harvey, which hit Texas and Louisiana more than a week ago, has claimed 60 lives and caused property damage estimated as high as $180 billion.

Economists said Harvey could weigh on gross domestic product for the third quarter.

The storm caused U.S. initial jobless claims to spike to a two-year high. Initial claims for state unemployment benefits surged by 62,000 to a seasonally adjusted 298,000 for the week ended Sept. 2, the highest since April 2015.

The weekly increase was the largest since November 2012. A Labor Department official said the data had been impacted by Hurricane Harvey.

In late trading, benchmark 10-year Treasury yields fell to 2.05 percent, from 2.106 percent late on Wednesday. Ten-year yields dropped to 2.034 percent, the lowest since Nov. 10.

Yields had recovered from lows on Wednesday after a congressional fiscal plan that includes a three-month suspension of the debt ceiling gained support from President Donald Trump.

U.S. 30-year bond yields dropped to 2.651 percent, down from 2.723 percent the previous session and also the lowest since November. Thirty-year yields were last at 2.665 percent. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith Mazzilli and Dan Grebler)

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