LONDON, July 10: US treasuries were slightly lower in London on Thursday, with volume light ahead of US data on Friday and Wednesday, but underlying sentiment remained bullish traders said.

"It's been a pretty non-descript morning, but the underlying bid is really quite strong," a bond salesman at a Japanese bank in London said. "There's been very little change in the shape of the yield curve."

The 30-year T-bond ended at 7-month highs in New York overnight at 100-27 on the back of positive technicals.

Trade was subdued ahead of US producer price data due on Friday and consumer price figures out on Wednesday, the trader said. A Reuters poll forecast June PPI to remain unchanged from May levels at minus 0.3 per cent.

At 09:03 GMT, the 30-year benchmark T-bond was at 100-25 to yield 6.564 percent, 3/32 off Tokyo levels, and 2/32 below New York.

September T-bond futures were 4/32 lower at 113-25 in automated trade."There is cautious optimism in the market that we'll see a decent PPI," said Jeremy Hawkins, Chief economist at BankAmerica in London. "That should help to support what still looks like a positive underlying tone."

Hawkins pegged psychological resistance at 6.5 pct for the 30-year yield. A positive PPI would see the market try to push through that level next week, he said.

On the downside, any heavy drop in Thursday's weekly jobless claims, expected to increse to 341,000 from 332,000 the previous week, could unsettle the market, but any damage was likely to be limited.

"We'd have to see something significantly different from market expectations (for jobless data) - but it's difficult to see the yield going through 6.60 percent," Hawkins said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.