By Deborah Levine

Treasury prices declined Tuesday as yields moved higher, with bond traders playing off Federal Reserve chief Ben Bernanke's comments restating that the U.S. central bank could buy longer-term Treasurys to keep loan rates low.

More aid to the banking system would be needed to foster an economic recovery, Bernanke also said in a speech he delivered in London.

Two-year note yields (UST2YR) rose 4 basis points to 0.79%. A basis point is one one-hundredth of a percent.

Ten-year note yields (UST10Y) were little changed at 2.31%.

The timing and strength of any global recovery remain "highly uncertain," Bernanke said.

The Fed has begun a plan to buy billions of dollars in mortgage-backed securities and debt sold by housing agencies including Fannie Mae (FNM) and Freddie Mac (FRE) to lower mortgage rates and spur growth in the housing market.

So far, the program has been successful in bringing down mortgage rates by reducing the gap between Treasurys, a benchmark for many types of loans, and yields on mortgage or agencies bonds.

Bernanke also said it may expand its program to buy asset-backed securities, which pool borrowings such as car loans and credit-card debt.

Also Tuesday, a government report showed the U.S. trade deficit in November plunged to $40.4 billion, reflecting weakening demand for imports as the nation's economic woes deepened.

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