U.S. government debt prices fell on Thursday, as data showed the U.S. economy grew at a faster-than-expected pace in the third quarter, boosting optimism of a rapid emergence from recession.

Also reducing a bid for bonds were U.S. stock gains at the market open and investors making room for $31 billion of new seven-year notes on Thursday.

The 3.5 percent third-quarter rise in the U.S. gross domestic products beat the 3.3 percent forecast by analysts. The government's first GDP reading for the quarter surprised some traders who began downgrading their outlook in the wake of disappointing data in recent days. 

The market was beginning to price in a weaker outlook, but today's GDP report was good across the entire spectrum, said John Spinello, chief Treasury strategist at Jefferies & Co. in New York.

Investors looking for more encouraging signs also found them in the latest jobless claims figures. They showed workers filing for unemployment benefits have been falling albeit still at elevated levels. 

In the wake of the first postive U.S. GDP reading in more than a year, another milestone is the Federal Reserve's last purchase for its $300 billion Treasury program. The program was launched seven months ago in a move to hold down long-term interest rates and to stimulate the economy.

Spinello said these lower bond prices should entice bargain-minded investors who shied away from Wednesday's $41 billion five-year Treasury note sale, part of this week's record $123 billion weekly government bond offering.

Some traders had thought seven-year Treasuries were expensive prior to the GDP-induced sell-off.

The price on seven-year notes US7YT=RR was down 12/32 at 99-20/32. Their yield which moves inversely to their price was 3.06 percent, up from 3.00 percent from late Wednesday.

In the when-issued market, traders expect the new seven-year Treasuries US7YTWI=TWEB to yield about 3.09 percent when they are set to price about 1 p.m. (1700 GMT).

Benchmark 10-year notes US10YT=RR were down 15/32 in price to yield 3.47 percent, up from 3.42 percent late on Wednesday.