TREASURIES-U.S. bonds steady before Fed meeting

LONDON Tue Dec 11, 2012 5:06am EST

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LONDON Dec 11 (Reuters) - U.S. government bonds were steady in Europe on Tuesday as expectations the Federal Reserve will announce more monetary easing offset the impact of more than $50 billion of new supply planned for this week.

* After its two-day meeting, the Fed is expected to announce it will buy $45 billion per month of longer-dated Treasuries beginning in January to replace its "Operation Twist" stimulus programme, which expires at the end of December.

* The Treasury will sell $32 billion in three-year notes on Tuesday, followed by $21 billion in 10-year notes on Wednesday, and then $13 billion in 30-year bonds on Thursday.

* U.S. 10-year yields were last 0.3 basis points higher on the day at 1.6215 percent. T-note futures were 2/32 lower at 133-18/32.

* "The markets are expecting more stimulus, but the question is whether they are going to keep the amount the same or the duration the same," one trader said, adding he did not expect 10-year yields to break their recent 1.55-1.70 percent range before the Fed announces its decision on Wednesday.

* Calmer Italian debt markets after a sell-off on Monday triggered by Prime Minister Mario Monti's decision to step down early also took the shine off safe-haven assets.

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