TREASURIES-U.S. debt prices slip as stocks rise

* Focus is on Jackson Hole, traders seek hints of QE3

* Bond price movement still tied inversely to stocks

* Bond losses help market prepare for $99 bln in supply (Recasts, adds quotes, updates prices; changes byline)

By Emily Flitter and Burton Frierson

NEW YORK, Aug 22 (Reuters) - U.S. Treasuries fell on Monday, as traders began to position ahead of a crucial speech by Federal Reserve Chairman Ben Bernanke at the end of the week, while stocks stabilized after weeks of losses.

Traders were also preparing for a $99 billion slate of bond auctions this week.

The rare equities gains came as investors began betting on whether Bernanke, at the Fed's annual retreat in Jackson Hole, Wyoming, will outline new measures to bolster the ailing economy.

Market participants think the Fed chairman could hint at the possibility of more quantitative easing measures in the future, though many say a bond-buying program like QE2, the $600 billion operation that ended July 1 would not be as effective, because Treasury yields are already so low.

"It seems like everybody's sort of pricing in this QE3, but monetary policy is not going to be super effective with the 10-year so low," said William Larkin, portfolio manager at Cabot Money Management in Salem, Massachusetts. "The only thing they could be doing is tearing the dollar down a little bit more to make our exports more attractive."

Another bond-buying campaign by the Fed, like the one Bernanke signaled at last year's Jackson Hole gathering, could could actually push Treasuries prices lower if it shored up stock market sentiment. By contrast, the lack of any new scrap of information on more easing could trigger a small sell-off in bonds.

"If he downplayed the possibility of it or likelihood of it, I think the bond market would sell off a quick 10 basis points, and then everybody would wait to see how the equity market reacted," said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York.

Bernanke is scheduled to speak Friday morning in Jackson Hole.

Those who were skeptical about the chances of a third quantitative easing program used the retreat in Treasuries to set up for the auctions.

The Treasury Department will sell $35 billion each of two-year and five-year notes, and $29 billion of seven-year notes this week, in auctions set for 1 p.m. (1700 GMT) on Tuesday, Wednesday and Thursday.

"It's the longer-dated stuff that's going to be the highlighted items," Larkin said, noting that shorter-dated notes would be anchored by the Fed's recent pledge to keep rates exceptionally low until the second half of 2013.

"From that standpoint, we're going to potentially continue to have weakness on the longer-dated securities," Larkin said.

"The seven-year auction is likely to be stronger than normal--it's still in the sweet spot."

The benchmark 10-year note was last down 10/32 in price, yielding 2.10 percent versus Friday's close of 2.06 percent.

This week's auctions start with Tuesday's $35 billion offering of two-year notes. (Editing by Leslie Adler)