Treasury prices remained flat after the government release of jobless claim figures Thursday morning.

The 10-year lost -2/32, to yield 5.15 percent, up from 5.13 at the close of session Wednesday. The 30-year lost - 8/32, to yield 5.27 percent, up from 5.23 percent. Bond prices and yields move in opposite direction.

First-time applications for state unemployment insurance benefits rose for the third straight week, climbing to 324,000 in the week ended June 16 from a revised 314,000 the prior week and to the highest level since April 21, the Labor Department said.

In further economic news, leading indicators came in slightly better than expected, but had little affect on the markets. The Philadelphia Fed regional manufacturing index will be released 12:00 pm ET.

Bulls battled bears in the first moments of trade Thursday as investors eyed rising rates and oil amid problems with Bear Stearns hedge funds heavily weighted with subprime debt.

The Dow, Nasdaq and S&P all sank early, extending the big losses those indexes suffered Wednesday.

Treasury prices fell in early trading, bounced higher, then fell again Thursday morning, taking the yield on the benchmark 10-year note up to 5.16 percent from 5.14 percent late Wednesday.

Oil prices rose, taking them above the $69 a barrel mark. U.S. light crude gained 70 cents to $69.56 a barrel in electronic trading.

The fallout from problems at two Bear Stearns hedge funds on the verge of collapse could roil the stock and bond markets and lead to a tightening of credit, analysts say.