TREASURIES-Perceived budget talks progress weighs on U.S. debt

LONDON Mon Nov 19, 2012 6:04am EST

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LONDON Nov 19 (Reuters) - U.S. bond prices fell on Monday after lawmakers appeared more willing to reach a deal to avert automatic fiscal tightening measures that would threaten an already shaky global economic recovery.

* Leading Republican and Democrat lawmakers expressed confidence on Sunday that they could avert the $600 billion "fiscal cliff" of tax hikes and spending cuts even as they stuck to their positions.

* Benchmark 10-year T-note yields rose 2.2 basis points to 1.6063 percent, off a two-month low of 1.5560 percent hit last week. T-note futures were 8/32 lower at 133-29/32 as riskier assets, such as stocks, firmed.

* "People are getting more optimistic ... that we won't be driving off the cliff," said Craig Collins, a trader at Bank of Montreal.

* Hostilities between Islamist militants and Israel continued on Monday, making investors wary of geopolitical risk and limiting losses for safe-haven assets such as German Bunds and U.S. Treasuries.

* Traders said uncertainty over the payment of aid to Greece and over how long Spain will take to request a bailout from its fellow euro zone members was also preventing a steeper rise in U.S. yields.

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