TREASURIES-Greek aid hits bonds as US 30-year sale disappoints

* Greek bailout sparks renewed risk appetite

* 30-year auction poor, but not as bad as feared

* US Treasury Department closes out week of weak refunding (Adds quotes, byline)

By Tom Ryan

NEW YORK, Feb 11 (Reuters) - U.S. Treasury debt prices fell on Thursday as investors turned to riskier assets after the European Union announced a bailout of Greece and the U.S. government closed out a week of poor bond sales.

European leaders pledged help for debt-ridden Greece, removing some uncertainty about a possible sovereign debt default and stocks rose. For details, see [ID:nLDE61A0W2] [ID:nN11148428]

While the rise in risk appetite put U.S. Treasuries in a downdraft earlier in the session, it was the 30-year auction that attracted the most attention after two dismal sales earlier in the week.

The government sold $16 billion of 30-year bonds at a yield of 4.720 percent -- the highest since Aug. 9, 2007 -- and above expectations.

"It wasn't particularly well bid, judged by the fact that the yield was at least two and a half basis points above the prevailing market at the bidding deadline," said Lou Brien, market strategist with DRW Trading Group in Chicago.

The 30-year offering, the last of this week's $81 billion in bond sales, attracted bids worth 2.36 times the amount on offer, which was the weakest since November and below the average of 2.44 times in the 11 auctions over the last year. [ID:nN1196110]

Yields at the auction were the highest in over two years and also above expectations based on trade in the "when-issued" market at the deadline.

STEEPENING YIELD CURVE

Treasury prices overall trended lower this week after the series of weaker-than-expected auctions, but it was a poor-showing at Thursday's 30-year auction that prompted the further steepening of the yield curve.

"For the week, I would give them all a 'C' category, certainly not a disaster as the bid-to-covers remain pretty firm," Brien said.

In late afternoon trading, two-year Treasury bonds were unchanged on the day, yielding 0.88 percent while 30-year bonds were 19/32 lower, yielding 4.68 percent, up from Wednesday's yield of 4.64 percent.

Financial markets are watching bond auctions closely given a burgeoning U.S. budget deficit, brought on by a costly financial sector bailout and efforts to stimulate the economy.

GREECE, TEMPORARY RELIEF

News that European leaders said they had struck a deal on Thursday to help heavily-indebted Greece was a mild negative for bonds, but its affects aren't likely to last, said, Scott Colyer, Chief Executive Officer of Advisors Asset Management in Monument, Colorado.

"I don't see this having a long-term effect on the Treasury market," he said.

"Once Greece is fixed, then we move on to Portugal, Spain and so on; those stories don't just go away," he said.

Meanwhile, the U.S. Labor Department's report that new jobless claims were slightly lower than forecast last week was slightly was also negative for bonds.

New claims could be restrained in the next report as well due to this week's severe weather which might have kept people from filing claims in states affected by the winter storm.

"The initial claims data released next week cover the week that corresponds with the February employment survey period (the week we are currently in)," John Ryding and Conrad DeQuadros, economists at RDQ Economics, said in a report.

"Given inclement weather across the country and major snowstorms on the East Coast, February employment (particularly hours worked) is likely to see a significant impact from the weather," they wrote.

(Reporting by Tom Ryan, additional reporting by Burton Frierson and Ellen Freilich)