TREASURIES-Prices fall with waning safe-haven interest

* ADP says private employers cut 20,000 jobs in February

* Data soothes some fears for Friday employment numbers

* ISM shows stronger-than-forecast services growth (Updates prices)

By Chris Reese

NEW YORK, March 3 (Reuters) - U.S. Treasury debt prices eased for a second day on Wednesday after data showed private sector job losses slowed last month, raising hopes the economy's recovery was becoming more pronounced and tarnishing the safe-haven appeal of government debt.

Price losses were extended slightly following data showing faster-than-expected growth in the vast U.S. services sector in February.

ADP, a payroll administration firm, said U.S. private employers shed 20,000 jobs in February, lower than the 60,000 jobs lost in January. While the February number matched analysts' expectations, it calmed the nerves of some investors looking for a big February jobs loss in government employment data due on Friday.

"Yields across the board are a bit higher," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut. "While the 20,000 drop was expected, the market had whisper numbers considerably higher due to the weather."

The median of forecasts from analysts polled by Reuters is for government data on Friday to show the U.S. lost 50,000 jobs in February after losing 20,000 jobs in January.

Some analysts had said job losses last month may be larger than originally expected, especially after White House economic adviser Larry Summers said late on Monday that winter blizzards were likely to distort the jobless figures.

However, the ADP data countered some of that speculation of massive job losses, and Treasury debt prices suffered as a result.

U.S. benchmark 10-year Treasury notes US10YT=RR were trading 7/32 lower in price to yield 3.64 percent, up from 3.61 percent late on Tuesday, while two-year notes US2YT=RR were 1/32 lower to yield 0.82 percent from 0.80 percent a day earlier.

Data from the Institute for Supply Management showed the U.S. services sector grew in February at its fastest pace in more than two years. Its services index reading rose to 53.0, well above analysts' expectations for a reading of 51.0 and up from 50.5 in January. For details, see [ID:nN03246512]

The evidence of growth in the services sector, along with the ADP jobs data, boosted optimism on the economic outlook and increased speculation the Federal Reserve may move to tighten ultra-loose monetary policy sooner rather than later.

"It tells us that things are normalizing, which means that Fed policy needs to move from emergency mode to accommodative," said William Larkin, portfolio manager with Cabot Money Management in Salem, Massachusetts.

Fed fund futures <0#FF:> eased on Wednesday, increasing the implied chances of the U.S. central bank raising interest rates by the end of the year.

Five-year Treasury notes US5YT=RR were trading 2/32 lower in price to yield 2.29 percent, up from 2.27 percent late on Tuesday, while the 30-year bond US30YT=RR was 12/32 lower to yield 4.59 percent from 4.57 percent.