By Susanne Walker March 18 (Bloomberg) -- Treasuries fell as Libya said it’s ceasing all military action after the United Nations Security Council authorized a no-fly zone and the Group of Seven nations intervened in currency markets to stabilize the yen. U.S. debt pared its weekly gain as the Federal Reserve joined other central banks in selling the yen after a surge in the currency to a record high threatened Japan’s economy following the March 11 earthquake. Foreign Minister Moussa Koussa of Libya said it will start talks with the opposition, damping demand for U.S. debt as a refuge. “It looks like the flight to quality is coming out,” said Paul Horrmann, a broker in New York at Tradition Asiel Securities Inc. “There’s some resolution coming out of Libya. Yields snapped to the higher side.” The 10-year note yield increased three basis points, or 0.03 percentage point, to 3.29 percent at 9:53 a.m. in New York, according to BGCantor Market Data. The price of the 3.625 percent security due in February 2021 dropped 9/32, or $2.81 per $1,000 face amount, to 102 26/32. The benchmark note yield has still dropped 12 basis points this week, the most since Feb. 25. The 30-year bond yield increased three basis points to 4.47 percent today, paring its weekly drop to nine basis points. The yen declined the most in more than two years against the dollar, depreciating as much as 3.7 percent to 81.99 after touching 76.25 yesterday, the strongest since World War II. Gain in Nikkei The Nikkei 225 Stock Average rose as much as 3.5 percent as the weaker yen boosted the outlook for Japanese exporters and encouraged investors to buy higher-yielding assets. The Stoxx Europe 600 gained 0.7 percent. The 10-year note yield touched 3.14 percent yesterday, the lowest level since Dec. 8, as investors sought refuge in the safest and most easily traded securities in the aftermath of Japan’s magnitude-9 earthquake and tsunami last week and on political turmoil in North Africa and the Middle East. Libya declared a cease-fire after a United Nations vote cleared the way for strikes against Muammar Qaddafi’s regime. Libyan Foreign Minister Moussa Koussa made the announcement in a televised news conference carried by Al Arabiya TV today, adding that the UN resolution authorizing a no-fly zone violates the UN’s charter. Japan began the G-7 intervention effort, with Europe’s central banks, the Federal Reserve and the Bank of Canada following up in their market. Japan’s Vice Finance Minister Fumihiko Igarashi said in an interview that he hoped the action would put a floor under the dollar-yen rate. Fed Debt Buying As part of the Federal Reserve’s plan to use asset purchases to keep borrowing costs low, the central bank is scheduled to purchase as much as $2 billion of Treasury Inflation Protected Securities, or TIPS, maturing from April 2013 to February 2041 today. A Commerce Department report on March 25 is forecast to show the U.S. economy grew at a 3 percent annual rate in the fourth quarter, faster than the 2.8 percent previously calculated, according to a Bloomberg News survey. --Editors: Dennis Fitzgerald To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net

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