REFILE-TREASURIES-Bonds rise on weak U.S. data before 10-year sale

* Weak retail, PPI data lower Q2 U.S. GDP outlook
* Greek election worries underpin bids for bonds
* U.S. to hold $21 bln 10-year note reopening

By Richard Leong
NEW YORK, June 13 (Reuters) - U.S. government debt prices
rose on Wednesday after weaker-than-expected inflation and
consumer spending data reinforced the view of slowing U.S.
economic growth, which may result in more monetary easing from
the Federal Reserve.
The latest government figures on producer prices and retail
sales revived buying in safe-haven Treasuries, erasing their
earlier losses on selling in advance of a $21 billion auction of
an older 10-year note issue.
The bids for bonds were also underpinned by worries about
Sunday's Greek national election, whose outcome might put the
nation on the path of exiting from the euro zone and deepening
the region's debt crisis, traders and analysts said.
"The market turned around with everyone lowering their GDP
expectations," said Mike Franzese, head of Treasury trading at
Wunderlich Securities in New York.
The U.S. government said on Wednesday retail sales fell 0.2
percent in May, declining for a second straight month, while
producer prices fell 1 percent last month on a plunge in oil
prices.
Also on Wednesday, Goldman Sachs said its economists
downgraded their outlook on U.S. gross domestic product for the
second quarter to an annualized rate of 1.6 percent from their
earlier call of 1.8 percent.
Analysts say the latest data suggest Europe's fiscal mess is
a drag on the U.S. economy for a third consecutive spring, which
was a catalyst for bonds to rebound from their earlier losses.
Benchmark 10-year Treasury notes last traded up
4/32 in price, yielding 1.65 percent, down 1.5 basis points from
late on Tuesday.
The 30-year bond was up 5/32 with a yield of
2.76 percent, down 0.7 basis point from Tuesday's close.

Still the $66 billion supply in coupon-bearing government
supply has been a negative factor for Treasuries this week, as
traders sought to lower their values and buy them at cheaper
levels at auction.
Wednesday's 10-year note supply follows a relatively weak
auction of $32 billion in three-year Treasuries 24 hours ago.
Sovereign debt offerings from euro zone members this week
have also weighed bond prices with Treasury yields setting
historic lows on June 1.
"The market is facing a lot of supply from Europe and here.
We are going to have to work through them in the near term,"
said John Briggs, Treasury strategist at RBS Securities in
Stamford, Connecticut.
He added once the last leg of this week's Treasuries supply,
a $13 billion sale of 30-year bonds, is over on Thursday,
investors will likely step up their safehaven purchases of U.S.
and German bonds to hedge against a possible anti-bailout
coalition win at this weekend's Greek election.
Greek SYRIZA party leader Alexis Tsipras has pledged if
elected he will reject the steep budget cuts demanded by
European Union and the International Monetary Fund in exchange
for a 130 billion euro ($162 billion) bailout agreement signed
in March.
Traders fear a SYRIZA win would result a cut-off in funding
for Greece, sending the cash-strapped nation to a chaotic
default and worsening the region's financial woes.
The latest polls published before a pre-election blackout
showed SYRIZA running neck-and-neck with the conservative New
Democracy party, which wants only minor adjustments to the
bailout.