TREASURIES-Bonds flat in advance of 10-year auction

* Traders await Greek reform vote for bailout
* Benchmark yields climb to highest in 2 weeks
* Good demand seen for new 10-year issue at 2 pct
* Fed to hold one bond purchase, one note sale

By Richard Leong
NEW YORK, Feb 8 (Reuters) - U.S. Treasuries prices
were little changed on Wednesday with prices
retracing earlier losses even as traders reduced their
government debt holdings ahead of a $24 billion auction of
10-year notes.
Traders were worried about the demand for the 10-year note,
a day after relatively tame bidding for $32 billion worth of
three-year notes.
Hopes Greek leaders would reach a fiscal reform deal in
exchange for a bailout to avoid a disorderly debt default also
stoked selling in Treasuries, but lingering worries about the
future of the euro zone have kept longer-dated Treasury yields
from their recent highs set in late 2011, analysts said.
"There are some positionings going into the rest of the
refunding so that's weighing on the market," said John Canavan,
market strategist at Stone & McCarthy Research Associates in
Princeton, New Jersey.
Benchmark 10-year note yield crossed above the 2 percent
threshold for the first time in two weeks. It has risen since
Friday in the wake of a stronger-than-expected January payrolls
report and cautious optimism about Greece securing 130 billion
euro ($172 billion) in fresh aid from the International Monetary
Fund and the European Union.
Leaders of the three parties in the coalition of Greek Prime
Minister Lucas Papademos are attempting again to reach a fiscal
reform deal after Papademos postponed a meeting on the matter on
Tuesday.
"The situation in Greece is particularly fluid. I would hope
most people are taking what they have said about a deal with a
large grain of salt until a deal is signed, sealed and
delivered," Canavan said.
The benchmark 10-year note was flat at 100-6/32,
yielding 1.98 percent. The 10-year yield touched 2.005 percent
in overseas trading.
The 30-year bond was unchanged on the day at
99-17/32 with a yield of 3.15 percent. It was down half a point
and hit a session high at 3.18 percent.
With one eye on the developments in Greece, traders were
gearing up for the second leg of this week's $72 billion
quarterly refunding. They expect the new 10-year issue
to sell at 2.042 percent, above the record low
of 1.900 percent at last month's 10-year auction.
At this level, the 10-year note should entice interest from
domestic and overseas investors, analysts said.
The Treasury will announce the 10-year auction results
shortly after 1 p.m. (1800 GMT).
While the Treasury continues its February refunding, the
Federal Reserve will hold two operations for its $400 billion
Operation Twist program aimed at holding down long-term interest
rates. At 11 a.m. (1600 GMT) It plans to buy $1.5 billion to
$2.0 billion in Treasuries due in 2036 to 2041, followed by a
$8.00 billion to $8.75 billion sale of Treasuries due in 2013 at
2 p.m. (1900 GMT).
In the absence of major economic data, traders may look for
clues on what the Fed policy-makers are thinking when San
Francisco Fed President John Williams is scheduled to speak
about the economy at 10:50 a.m. (1550 GMT).