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Bond prices dip; jobless rate falls

NEW YORK -- Treasury bond prices were mostly lower Friday, boosting interest rates to the highest level in 13 months, as money flowed back into stocks after a key report eased the recent inflation worries.

The price of the benchmark 30-year Treasury bond slipped 1/8 point, or $1.25 per $1,000 in face value.Its yield, which moves in the opposite direction, edged higher from late Thursday's 5.95 percent to finish at 5.96 percent, the highest level since mid-May of last year. The long-bond yield is a barometer for the interest charged on many types of consumer and business loans.

In the broader market, prices of Treasury securities with short-term and intermediate-term maturities finished unchanged to 1/32 point lower, reported Bridge Telerate.

In a key reading on inflationary pressures, the Labor Department reported Friday that the nation's unemployment rate dipped back to a 29-year low of 4.2 percent in May.

While a strong job market could give workers leverage to force wages higher, pushing up production costs and prices, inflation-wary investors were relieved to see that only 11,000 jobs were created last month, far below the 225,000 predicted by economists.

The report also showed that average hourly earnings rose 3.6 percent in May compared to a year ago, only a slight acceleration from a 3.2 percent increase the month before.

The Federal Reserve recently warned that it was prepared to boost interest rates to slow the economy in the event of a resurgence of inflation. Higher rates and inflation make bonds and other fixed-income investments less appealing.

In other trading Friday, yields on three-month Treasury bills fell to 4.53 percent from 4.60 percent late Thursday, while the discount fell 0.06 percentage point to 4.42 percent.

Six-month yields were unchanged at 4.94 percent while the discount held steady at 4.75 percent. One-year yields rose to 5.06 percent from 5.04 percent, while the discount rose by 0.02 percentage point to 4.81 percent.