By Dakin Campbell and Bo Nielsen Oct. 8 (Bloomberg) -- Treasuries rose after the Federal Reserve and other central banks cut benchmark interest rates by half a percentage point in an emergency move to calm turmoil in financial markets. Yields fell after initially gaining after the U.S. central bank lowered it target rate for overnight lending to 1.50 percent. The European Central Bank and four other central banks also lowered interest rates in the unprecedented move. The cost of borrowing in dollars overnight surged amid speculation more bank failures are ahead. ``The coordinated nature of this is dramatic,'' said David Ader, head of U.S. government bond strategy at RBS Greenwich Capital in Greenwich, Connecticut. ``The market had it priced in as evidenced by what's happening at the front end of our curve.'' The yield on the two-year note fell 3 basis points to 1.44 percent at 7:172 a.m. in New York, according to BGCantor Market Data. The London interbank offered rate, or Libor, that banks charge each other for such loans climbed to 5.375 percent, the British Bankers' Association said. The Fed invoked emergency powers yesterday and said it will shore up the $1.6 trillion commercial paper market, lending directly to U.S. corporations for the first time since the Great Depression. Fed Chairman Ben S. Bernanke said in a speech yesterday an intensifying credit crunch means officials must ``consider'' lowering borrowing costs To contact the reporter on this story: Dakin Campbell in New York at dcampbell27@bloomberg.net

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