Interest rates fell in the bond market Tuesday as investors responded to Europe's debt crisis by seeking the safety of Treasurys.

Treasury prices jumped, pushing their yields lower, after Standard & Poor's cut its credit ratings on Greece and Portugal. That fed investors' fears that Greece's fiscal problems were getting worse and that other weak European economies may also need help. Stocks fell sharply in Europe after the news came out, and U.S. shares followed.

The yield on the 10-year note, a benchmark for many consumer loans, fell to 3.71 percent in afternoon trading Tuesday from 3.81 percent Monday. Its price jumped 84.375 cents to $99.34375.

Treasurys were already higher as the stock market opened lower, then spiked sharply in late morning trading after news that S&P had downgraded Portugal's debt by two notches and slashed Greece's debt rating to junk.

Greece has already asked for a package of emergency loans to be delivered as its ability to raise money on the bond markets has essentially evaporated. Germany is now pressuring Greece to make further cuts to its public spending before agreeing to release its share of the bailout money, leading investors to worry that Greece may not be able to make a major debt repayment on May 19.

Investors were already worried about Greece's debt problems spreading to other countries in Europe. News of Portugal's downgrade send European stocks sharply lower and also pushed the euro down further against the dollar. Greece's fiscal crisis has been pushing the euro down for months because of weakening confidence in Europe's ability to protect its shared currency and enforce fiscal discipline among its weaker states.

The latest troubles in Europe's debt and stock markets sent investors into the relative safety of Treasurys. Greece's stock market plunged 6 percent and Portugal's 5 percent. The Dow Jones industrials were off about 140 points or 1.3 percent in afternoon trading.

In other trading, the yield on the 2-year note that matures in March 2012 fell to 0.99 percent from 1.07 percent. Its price rose 12.5 cents to $100.

An auction of 2-year notes was met with strong demand that was in line with a previous sale of the notes. The Treasury Department sold $44 billion in 2-year notes with a bid-to-cover ratio coming in at a relatively strong 3-to-1, essentially unchanged from the last auction of 2-year notes in late March.

The yield on 30-year bond that matures in February 2040 fell to 4.57 from 4.67 percent. Its price jumped $1.50 to $100.84375.