1.   A surge in Japanese share prices also hurt bonds, traders said.

2.   Comments from Federal Reserve Bank of San Francisco President Robert Parry indicating U.S. inflation will soon pick up also hurt bonds, traders said.

3.   Concern banks will sell some of the bonds they hold to raise the money they need to write off bad loans also hurt bonds, traders and investors said.

4.   Rising rates hurt bonds because new government securities issued at higher market rates reduce the attractiveness of existing fixed income issues.

5.   In addition, a disappointing monthly government refunding auction of two-year notes hurt bonds, Johnson said.