TREASURIES-Dubai relief, stock rally hit bond prices

* Bonds fall as stocks rally, 30-yr Treasuries down a point

* Receding Dubai worries halt safe-haven rally

* Manufacturing growth data soft but homes data strong (Adds strategist's comments, updates prices)

By Chris Reese

NEW YORK, Dec 1 (Reuters) - U.S. Treasury debt prices fell on Tuesday, pulling benchmark yields up from recent eight-week lows, as easing concerns over Dubai's debt problems and strong housing data bolstered riskier assets such as stocks.

State-controlled Dubai World said it will restructure nearly half its estimated $59 billion in debt. The news assuaged concerns a new chapter in the global credit crisis had opened and stocks got a lift. For details, see [ID:nGEE5B0041]

The Dubai saga roiled financial markets for nearly a week, inspiring a safe-haven bond rally that sent benchmark 10-year yields down to their lowest since early October on Friday. Signs early this week that Dubai-related anxiety was receding rekindled investors' appetite for risk.

"What we are seeing is some of the unwinding of the rush to Treasuries following the shock announcement last week of the moratorium on Dubai World's debt," said David Dietz, chief investment strategist at Point View Financial Services in Summit, New Jersey. "We are seeing the reestablishment of the risk trade," he said.

U.S. stocks rose by over 1 percent on Tuesday at the expense of bonds, with investors shrugging off softer-than-expected data on manufacturing growth and latching onto surprisingly strong pending home sales figures instead.

Benchmark 10-year Treasury notes US10YT=RR_ traded 20/32 lower in price, pushing yields up to 3.28 percent from 3.20 percent late on Monday. On Friday, yields fell as far as 3.15 percent.

Benchmark yields, which move inversely to prices, were on track for the biggest single-day rise in over a month.

"Stocks are up today and bonds are .... down even if the data were mixed to the weakish side," said Cary Leahey, senior managing director at Decision Economics in New York.

"The market reaction may be tied to the ripple effect of the Middle East, and the fact that bonds are probably taking their cue from stocks."

Thirty-year bonds US30YT=RR traded 1-8/32 lower in price, yielding 4.27 percent versus Monday's close of 4.20 percent. During the recent safe-haven rally, long bond yields fell as far as 4.16 percent on Friday, their lowest since October 21.

The U.S. manufacturing sector grew in November, the Institute for Supply Management said, but the gains were less than October's and below analysts' forecast. [ID:nN01398224].

Pending sales of previously owned U.S. homes rose unexpectedly to their highest level in 3-1/2 years in October, a survey showed, suggesting the housing market recovery was gaining steam.

The move out of Treasuries on Tuesday benefited commodities as well as stocks, with crude oil climbing toward $79 per barrel and gold hitting fresh record highs above $1200 an ounce.

Analysts also were watching November domestic vehicle sales, which edged higher in November led by an outsized gain for Hyundai Motor Co (005380.KS), in a trend automakers said pointed to a grudging recovery in the U.S. economy. [ID:nN01511318]

Two-year notes US2YT=RR traded unchanged in price to yield 0.68 percent, while five-year notes US5YT=RR traded 5/32 lower in price to yield 2.04 percent, up from 2.01 percent late on Monday.

(Additional reporting by Burton Frierson: Editing by Andrew Hay) ((chris.reese@thomsonreuters.com; +1 646 223 6073; Reuters Messaging: chris.reese.reuters.com@reuters.net))