Dealers had submitted $45.694 billion of bids forconsideration in the purchase, the third this week, and theTreasury's purchase was just slightly higher than the $7.025billion in a similar operation on April 27 Since late March, the U.S central bank has purchasedalmost $123 billion in U.S. government debt, part of a $300billion six-month program it has instituted to try to restrainlong-term borrowing costs to help end the recession. Stone & McCarthy Research Associates economist WardMcCarthy in Princeton, New Jersey said Treasuries also reversedsome of the short-covering rally that occurred on Wednesday.The short-covering followed news that Federal Reserve officialshad discussed in April the possibility of expanding purchasesof assets, including Treasuries. "This was just common sense and shouldn't have been a bigdeal for the market," McCarthy said.

"When Treasuries prices failed to break above the top endof an established channel, yesterday's short-covering rallybecame today's panic selling," he said. The Treasury's announcement that it would sell $101 billionin two-, five- and seven-year notes next week brought supplyconcerns back into the picture after a couple of weeks withoutTreasury auctions This, too, weighed on Treasuries prices. The Treasury is expected to issue about $2 trillion of debtin fiscal 2009. Benchmark yields have risen about a fullpercentage point since early January The weakening of the U.S. dollar fed the pressure on U.S.assets like stocks and Treasuries, said Dominic Konstam, headof interest-rate strategy at Credit Suisse in New York. "Foreign investors are less willing to buy the long end,"he said. Also, if investors are less interested in buying thedollar as a safe-haven trade because the economy is nearing theend of its sharp declines, then people have to ask whetherTreasury yields are too low and need to rise, Konstam said.

The 30-year bond skidded more than three points, its yieldrising to 4.34 percent from 4.16 percent on Tuesday The weakness came despite data hinting the U.S recessionmay be far from over Weekly data on U.S. jobless claims offered little hope foran imminent end to the recession, while continued claims forunemployment benefits extended their record rise. "The Achilles' heel of recovery is the labor market, whichcould put consumer spending under renewed downward pressure andspur another round of inventory liquidation," said RDQEconomics' John Ryding and Conrad DeQuadros in New York. Data also showed a faster-than-expected contraction inmanufacturing in the U.S Mid-Atlantic region in May. The Philadelphia Fed bank said its business activity indexfor May was minus 22.6 compared with minus 24.4 in April. (Additional reporting by Jennifer Alban and Chris Reese;Editing by Chizu Nomiyama) Bonds.

NEW YORK (Reuters) - New York state lost 189,000 private sector jobs from August 2008 to April 2009, almost half of the 400,000 jobs created in the five-year economic boom that ended last year, the state labor department said on Thursday. U.S.The state's April jobless rate eased a tenth of a percentage point to 7.7 percent from March, but labor analysts cautioned against interpreting such a small change as a sign that the eight-month pattern of job losses was about to end.Any rebound likely will take a few years, as companies often delay hiring until convinced a revival is truly underway."We're talking about a multi-year process," state labor analyst James Brown said by telephone.New York City's jobless rate also eased a tenth of a percentage point, edging down to 8.0 percent. The city rate was 4.9 percent rate a year ago, while the state rate stood at 5.0 percent.In New York City, "the big drivers most closely tied to the national economy, financial and professional industries are very weak," Brown said.The two sectors lost over half of the total of 95,000 jobs private city firms cut since April 2008, he said.Though the city's construction sector added 2,900 jobs, a normal amount for the month, the industry now has 12,000 less jobs than a year ago, Brown said.The leisure and hospitality sector, which rises and falls with tourism, added 3,400 jobs, but that is just over half of the 6,000 positions created each April for the last 10 years.A total of 2,300 securities workers lost their jobs in April. The sector has shed 20,200 positions in the last year, nearly 11 percent of its workforce."Now we're starting to see more losses in banking and even real estate has turned modestly negative," Brown said.The overall financial sector shed 3,000 jobs in April, and has lost 26,200 positions over the year.