TREASURIES-Longer-dated U.S. bonds fall ahead of TIPS auction

* Traders set up for first 30-year TIPS auction since 2001

* Analysts say biggest price drivers are supply, stocks

By Emily Flitter

NEW YORK, Feb 22 (Reuters) - Longer-dated U.S. Treasury debt prices fell on Monday ahead of an auction of 30-year inflation-indexed securities scheduled for later in the day.

The prices of 30-year Treasury bonds and 10-year Treasury notes fell as traders prepared for the $8 billion auction at 1 p.m. (1800 GMT). The Treasury Department last issued 30-year TIPS in October, 2001.

"There's a little uncertainty as to how we'll be able to take down the size of that," said Rick Klingman, the managing director of Treasury trading at BNP Paribas in New York.

"TIPS traders are selling the back end of the curve to set up for that auction."

The benchmark 10-year Treasury note US10YT=RR was down 4/32 to yield 3.80 percent, up from 3.78 percent late on Friday. The 30-year Treasury bond US30YT=RR was down 13/32 for a yield of 4.74 percent, compared with 4.71 percent late on Friday.

Prices in the middle of the curve showed less movement. The three-year Treasury note US3YT=RR rose 1/32 to yield 1.49 percent, compared with a yield of 1.50 percent late on Friday. The price of the seven-year Treasury note US7YT=RR was unchanged. Its yield was 3.79 percent.

"At some point you've got to expect the curve to flatten this week," said Marty Mitchell, the chief market technician at Stifel Nicolaus in Baltimore.

"Obviously supply this week is going to be the big focus," he added. "We'll keep an eye on stocks as well coming out of the Federal Reserve's discount rate move last week and the recent struggle for stocks to stay positive."

Treasury is set to auction two-, five-, and seven-year notes this week in addition to Monday's TIPS auction, for a record-setting issuance totalling $126 billion. (Editing by Chizu Nomiyama)