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TREASURIES-U.S. bond prices rise as world stock markets drop
* U.S (Other OTC: UBGXF - news) . yields fall with German yields on ECB stimulus bets
* U.S. bond market to close early at 2 p.m. (1900 GMT) (Updates market action, adds quote)
By Richard Leong
NEW YORK, Nov 27 (Reuters) - U.S. Treasuries prices rose on Friday, with benchmark yields hovering at their lowest levels in over three weeks as global stock market losses stoked demand for lower-risk government debt.
Bond prices initially rose on a steep sell-off in Chinese equities after Reuters reported Chinese stock regulators widened their probe of brokerages to include the country's fourth-largest securities firm.
They clung to those gains as U.S. blue-chip shares slipped on worries about weak consumer spending. Early evidence suggested American shoppers were not rushing out to stores on Black Friday, the unofficial start of the critical year-end period for many U.S. retailers.
"We are seeing how the stock market is trading. There are concerns about the drop in the Shanghai composite," said Jim Vogel, interest rates strategist at FTN Financial in Memphis, Tennessee.
The Shanghai Composite Index dropped 5.5 percent for its largest single-day loss since late August.
The Dow Jones industrial average and Standard & Poor's 500 index were down 0.2 percent and 0.01 percent, respectively. [.N}
Benchmark 10-year Treasuries notes were up 4/32 in price for a yield of 2.218 percent, down 1 basis point from late on Wednesday. Earlier, the 10-year yield touched 2.204 percent, the lowest level in more than three weeks, according to Reuters data.
The decline in U.S. yields came as German five-year yields hit a record low of -0.206 percent as traders anticipate possible policy easing from the European Central Bank next week.
Trading volume was light as U.S. financial markets will close early after being shut on Thursday for the Thanksgiving holiday.
The U.S. bond market will close at 2 p.m. (1900 GMT), an hour after Wall Street is to stop trading.
The bond market's gains were limited on caution ahead of next week's wave of top-tier U.S. data, including the November payrolls report, analysts said.
Evidence of further improvement in the U.S. labor market would reinforce expectations the Federal Reserve would raise interest rates at its Dec (Shanghai: 600875.SS - news) . 15-16 policy meeting.
The futures market implied traders see a 78 percent chance of a December rate hike, unchanged from Wednesday, according to CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch program. (Reporting by Richard Leong; Editing by Chizu Nomiyama and Dan Grebler)
