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Treasury bonds rose Tuesday, their first major gains in two weeks, as the highest yields in a month drew investors into fixed-income securities.
    "Yields were near some of their highest levels of the year,� said Bill Hornbarger, fixed-income analyst at A.G. Edwards."You see some people interested in bonds at those levels.�
    Just before 3:15 p.m. ET, the price of the benchmark Treasury bond rose 10/32 to 97-27/32. Its yield, which moves inversely to its price, fell to 6.28 percent from 6.30 percent Monday.
    The gains came despite two economic reports Tuesday that showed the kind of inflation- suggesting strength that might typically spark a Treasury sell-off. The Conference Board's index of consumer sentiment surged to 135.8 in November from a revised 130.5 reading in October. Separately, the National Association of Purchasing Management said its Chicago prices paid index rose to 70.9 from 65.4.
    But David Ging, bond analyst at Donaldson, Lufkin & Jenrette, said Monday�s bond sell-off, which pushed yields to November highs, effectively discounted the day�s news of rising inflation, which erodes a bonds� value. 
    Bond traders, Ging said, "are really looking at the payrolls data because that�s what (Federal Reserve chief Alan) Greenspan�s looking at.�
    That data comes Friday, when the Labor department�s last monthly jobs report of the year is expected to show the kind of labor market tightness that may lead to rising inflation, and help prompt the Federal Reserve to raise interest rates again.
    The November unemployment rate is seen holding steady at 4.1 percent, near a 30-year low.
    Economists polled by Reuters estimate that non-farm payrolls grew by 226,000 jobs in November.
    The Fed tightened credit three times this year in a bid to pre-empt inflation and cool an overheating economy.
    Analysts said bonds also got support Tuesday as falling oil prices eased concerns over rising inflation. In New York, light crude for January delivery fell 91 cents to $25.05 a barrel.
    "Oil prices have a lot to do with,� A.G. Edwards� Hornbarger said of Tuesday�s gains.
    Dollar stuck in the middle
    The yen rose Tuesday, nearing last week�s four-year high against the dollar, as traders shrugged off the Japanese government�s second effort in two days to weaken its currency.
    Worried about the strong yen�s drag on exports, the Bank of Japan�s latest effort to sell yen for dollars proved ineffective, as traders bet on Japan�s economic recovery by buying yen.
    "The market's current belief that U.S. and European monetary officials will not come to the assistance of their Japanese counterparts is rendering Bank of Japan intervention futile,� said Alex Beuzelin, market analyst at Ruesch International.
    Just before 3:15 p.m. ET, the yen rose to 101.95 from 102.70 Monday, a 0.73 percent increase in the yen�s value.
    Officials fret that a strengthening yen, because it makes exports tougher to sell, may derail the Asian nation's fragile economic recovery. Yen strength hurt Japanese stock market�s, which were pulled down by major exporters like Sony Corp. and Fujitsu Ltd. But the yen continues to strengthen as money floods into Japanese stocks, which must be bought in local currency.
    The euro, meanwhile, weakened against the dollar, keeping near lifetime lows versus the U.S. currency
    Just before 3:15 p.m. ET, it cost $1.0085 to buy one euro compared with $1.0100 Monday, a 0.15 percent drop in the euro�s value.
    Analysts recently have come to blame the slide of the euro, which has lost about 16 percent of its value in its 11-month lifespan, on uncertainty over the European Central Bank�s policy stance.
    "The ECB main challenge this week is to give the markets a clear message that it does not favor a precipitous decline in the euro,� Donaldson, Lufkin & Jenrette said in a note to clients Tuesday. "In our view, any further weakening of the euro below parity (with the dollar) may have to be met with stronger policy coordination than seen to date