Short-dated maturities, favoured by investors seeking refuge in turbulent times, were slightly out performing longer-dated Treasury issues."The market is just waiting for events this week to unfold. There's still tensions in the Middle East and that puts a quality bid in the Treasury market," said Mr Bill Sullivan, director of money market research at Morgan Stanley Dean Witter.

Israeli Prime Minister Ehud Barak invited Ariel Sharon, leader of the right-wing Likud party, to talks on forging a national emergency coalition government after declaring a time-out on Sunday in peacemaking with the Palestinians. In early dealings, 10-year Treasury notes were flat at 100-26/32, yielding 5.64 per cent. Two-year Treasury notes were flat at 100-8/32, yielding 5.86 per cent. Five-year notes were up 2/32 to 104-9/32, yielding 5.67 per cent. The 30-year long bond was unchanged at 107-13/32, yielding 5.73 per cent.

The downside on Treasuries was limited by expectations of further volatility in the US stock markets. Stocks have been on the ropes in recent weeks as company after company has warned that the pace of profit growth is slowing as the giant US economy cools.

Early indications were that the US stocks - which have been on a gut wrenching roller coaster ride in recent weeks - would open lower and this was also adding to the appeal of government backed securities, traders said.

A lack of any major economic data until Thursday's employment cost report and Friday's third quarter US economic growth figures was another reason why traders and investors were set to keep their eyes squarely on stocks and events in the Middle East. Treasuries have soared this month, sending yields tumbling sharply against a backdrop of tumbling stock markets. The US technology shares have lost 18 per cent and blue-chip stocks about 9 per cent since the beginning of September on concerns a slowing economy is hurting profit growth.