TREASURIES-Bonds little changed after decent 2-year auction

* Two-year auction decent but unspectacular

* Strong housing, consumer data weigh on bonds initially

* Stocks lose some luster, giving bonds a boost (Updates to after two-year auction)

By Burton Frierson

NEW YORK, Aug 25 (Reuters) - U.S. Treasury debt prices were little changed on Tuesday as decent demand at an auction of two-year notes offset strong housing and consumer confidence data.

Greater-than-expected improvements in U.S. home prices and consumer confidence made a good argument for dumping safe-haven government bonds in favor of riskier assets such as stocks.

Treasuries held up well, however, especially after stocks trimmed their earlier gains, while the government's $42 billion auction of two-year notes did nothing to unnerve investors worried about the burgeoning national debt.

Lou Brien, market strategist at DRW Trading in Chicago, said the auction was "decent but not great" but the results offered no clues as to the subsequent five-year and seven-year auctions this week.

"You can't reading anything into it," said Brien.

The benchmark 10-year Treasury US10YT=RR was last up 3/32 on the day, yielding 3.46 percent versus 3.48 percent at Monday's close.

Overall demand was higher than usual based on the bid-to-cover ratio of 2.68 versus 2.56 over the last year.

Foreign and institutional investors showed robust demand, based on the indirect bidding category. They took nearly half of the issue, versus their average of about 39 percent over the last year.

The main negative was that the yield at the auction came out slightly higher than expectations reflected in the when-issued market just before the auction, suggesting dealers were aggressive in bidding for lower prices but not remarkably so.

The existing two-year Treasury note US2YT=RR was down 1/32 for a yield of 1.05 percent, versus 1.03 percent on Monday.

Given that the market faces $109 billion in supply this week, auctions will be watched closely, as has been the case all year with the government expected to issue around $2 trillion in new bonds.

Treasury will offer $39 billion of five-year debt on Wednesday and $28 billion of seven-year paper on Thursday.

Government forecasts showed on Tuesday that the U.S. national debt will nearly double over the next 10 years and may approach $20 trillion. (Editing by James Dalgleish)