TREASURIES-Treasuries rise as Fed report stokes slowdown fears

* S&P 500, Nasdaq see 2nd day of losses in five trading days * Bid emerged at 10-year 3.04-3.065 percent support area * US durable goods orders drop; gloom seen in Beige Book (Recasts lead, adds quote, updates prices)

By Emily Flitter

NEW YORK, July 28 (Reuters) - U.S Treasury debt prices gained on Wednesday as the Federal Reserve's latest report on regional U.S. economies showed lackluster growth, while U.S. durable goods orders unexpectedly fell. The S&P 500 and the Nasdaq experienced their second down day in roughly a week.

Prices rose after a strongly bid auction of five-year Treasury notes. Traders hailed the sale of $37 billion of five-year notes as a success after the high yield in the auction was lower than the yield at which five-year notes were trading simultaneously in the open market.

"The bid that has persisted in the market over the last several days is still in the market despite better-than-expected earnings," said Christian Cooper, senior rates trader at Jefferies & Co. in New York.

"Whether this is cash flowing into the market for month end or real concerns over equities rolling over remains to be seen, but the demand for fixed income remains strong."

The Federal Reserve's Beige Book report released on Wednesday showed sluggish growth. For more, click on [ID:N28200227].

"As we continue to see the recovery really just kind of bouncing along, it's not very surprising that we didn't see any sort of robust wage pressure," said Lindsey Piegza, economist at FTN Financial in New York. "It's clear the Fed is not under pressure to make any move."

Prices, which were marginally higher in the early afternoon, rose further after the Beige Book report landed.

The benchmark U.S. 10-year Treasury note US10YT=RR was up 14/32, its yield at 3 percent.

"The market just sort of took today's data and said, 'You know what? There's still a huge demand for Treasuries; the economy's not as strong as we want it, I think we'll go ahead and buy these things,'" said Todd Colvin, vice president at MF Global in Chicago.

"The auction results came out -- they were very strong," he added. "Demand remains very strong for U.S. debt."

The five-year note US5YT=RR was last up 14/32 in price for a yield of 1.71 percent. Its auction yield was 1.796 percent.

"Strong bidding ... good coverage," said John Spinello, Treasury bond strategist at Jefferies & Co in New York, in an e-mail message immediately after the 1 p.m. EDT (1700 GMT) auction.

Spinello cited technical resistance for the 10-year note in the area between 3.02 percent and 2.975 percent, and support back at 3.05 percent to 3.07 percent,

The seven-year note US7YT=RR, which is to be auctioned on Thursday in a $29 billion sale, yielded 2.41 percent and showed a price gain of 16/32 -- or half a point.

New orders for durable goods fell for a second straight month in June, posting their largest decline since August, according to a government report on Wednesday.

Analysts said the 1.0 percent drop in orders offered further evidence that economic growth cooled in the second quarter.

Ward McCarthy, chief financial economist at Jefferies & Co in New York, said the bond market liked the report, which echoed "the more cautious tone" evident in other data.

The 30-year bond was up 7/32 in price to yield 4.07 percent, just below its yield at 4.08 percent late on Tuesday. (Additional reporting by Ellen Freilich; Editing by Jan Paschal)