NEW YORK (Dow Jones)--Treasurys rose Tuesday as investors sought shelter in haven assets amid rising fear about sovereign-debt woes in the euro zone. The bond market extended its gains over the past few sessions as signs grew that the debt crisis in Ireland is spreading. The bailout package for the debt-ridden nation announced over the weekend has failed to ease fear of a possible default on the government debt in coming years. As a sign of stress, borrowing cost continued to climb not only in Portugal and Spain but also Italy and Belgium. The yield premium to hold 10-year Italian government bonds over German bunds, the benchmark in the euro-zone region, surged above 200 basis points for the first time since before the euro's launch in early 1999. The euro extended its losses against the dollar, falling by 1% to $1.2998. The common currency has tumbled from the recent peak of $1.4283 in early November. "Ireland bailout relief trade has been short-lived, and the contagion trade now spreads across the euro zone," said Kenneth Broux, market strategist at Lloyds Banking Group. "No one quite knows what will make the turbulence go away, but a further rise in Italian yields would be dangerous." As of 8:25 a.m. EST, the benchmark 10-year note was 16/32 higher to yield 2.768%. Bond prices move inversely to yields. The 30-year bond was 1 9/32 higher to yield 4.070%. Traders noted that the Treasury market also got a boost from month-end buying. On the last trading session of each month, many fund managers need to buy Treasurys to match the month-end adjustments in their benchmark indexes as newly minted bonds replace maturing debt. The Federal Reserve is scheduled to buy Treasurys targeting maturities between Dec. 31, 2014, and May 31, 2016. The buying will be part of the Fed's $600 billion Treasury bond buying program launched earlier this month. By buying Treasurys regularly until June, the Fed hopes to push long-dated borrowing costs lower for consumers and businesses to boost an economic recovery. The operation will be conducted during the late-morning session by the Federal Reserve Bank of New York. The result will be released shortly after 11 a.m. EST. Flows into the Treasury market have been moderate, especially compared to the late spring, when the Greek debt crisis roiled global markets. Treasury yields have risen this month from their recent trough as many investors cashed out following the Fed's announcement to buy $600 billion in Treasurys, basically printing more dollars to support the economy. Some data from the U.S. and overseas have been better than forecast, boosting some optimism that global economic growth may withstand the stress from the euro-zone debt woes. The 10-year note's yield jumped to a three-month high of 2.97% on Nov. 15, rising from 2.332% on Oct. 8, when it reached its lowest level since January 2009. But some traders said the yield could fall back to 2.5% in coming weeks should the euro-zone problems worsen. -By Min Zeng, Dow Jones Newswires; 212-416-2229; min.zeng@dowjones.com

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