TREASURIES-US debt prices fall as Europe data brightens

* UK GDP shows largest jump in four years

* German business sentiment reaches three-year high

* Next week's supply of $104 billion in debt weighs (Adds context, quotes, updates prices)

By Emily Flitter

NEW YORK, July 23 (Reuters) - U.S. Treasury prices fell on Friday, following German and UK government bond prices lower, after surprisingly strong economic data from Europe lifted global stocks.

Gross domestic product in Britain grew by the largest amount in four years, while a measure of business sentiment in Germany hit a three-year high. The news lured investors out of safe-haven government bonds and into equities and other, riskier assets.

"The idea that Europe's going to lead us into a recession is being questioned," said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York.

The benchmark 10-year note US10YT=RR lost 16/32 in price to yield 2.99 percent, up from 2.94 percent late on Thursday.

With no economic data on the U.S. calendar on Friday, traders were anticipating the release of the results of a round of stress tests performed on European banks to be the main driver of price action. European Union officials will release the results at 12 p.m. (1600 GMT).

Klingman said it wasn't clear whether the test results would have an immediate affect on Treasury prices.

"I don't know if it's going to be an instantaneous thing," he said. "The findings will come out, and then people will crunch the numbers over the weekend."

Rising stocks also kept pressure on Treasury prices. The Treasury market has shown a strong correlation to the stock market for most of the spring and summer.

"The resilience of the equity market, the earnings that have come out, that's pretty impressive on the equities side that's probably going to allow for a risk-on trade," said John Spinello, Treasury bond strategist at Jefferies & Co in New York.

Treasury traders are facing $104 billion in new coupon supply next week. The Treasury Department holds three days of auctions of two-year, five-year and seven-year notes.

Spinello said Friday's sell-off was a chance to set up for the coming supply.

"This will allow us to buy the notes we're going to be bidding on next week a little cheaper," he said.

The 30-year bond US30YT=RR lost a full point early in the trading day and was last trading 25/32 lower with its yield rising to 3.99 percent, up from 3.95 percent on Thursday.

Two-year Treasury notes US2YT=RR lost 1/32 in price on Friday to yield 0.58 percent. The five-year note yield US5YT=RR on Friday rose to 1.71 percent from 1.68 percent at Thursday's close. (Editing by Padraic Cassidy)