* Treasury to sell $29 billion seven-year notes * Jobless claims rise but four-week average dips * Fed meeting, nonfarm payrolls data key next week By Luciana Lopez NEW YORK, July 25 (Reuters) - Prices for U.S. Treasuries slipped on Thursday ahead of a sale of seven-year notes, with new economic data doing little to alleviate uncertainty over upcoming Federal Reserve policy decisions. First-time applications for U.S. unemployment benefits increased slightly last week, but the underlying trend pointed to continued job gains. Analysts underscored seasonal factors affecting the rise in jobless claims, which Fed policymakers might consider when they meet next week to consider when to slow their monthly $85 billion purchases of Treasuries and mortgage-backed securities. Those seasonal factors also make it tricky to use the data as a bellwether for key nonfarm payrolls data due next week. "We tend to discount the July claims numbers as a predictor for payrolls because of the volatility," cautioned Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York. As part of its stimulus program, the Fed on Thursday bought $4.825 billion of Treasuries maturing between July 2017 and March 2018. Investors on Thursday were positioning themselves for the third and final sale of new intermediate-dated debt this week, with the Treasury slated to sell $29 billion of seven-year notes later in the session. "We're probably going to trade in a range until getting close to the auction, when maybe some more concession comes in," said Thomas Simons, money market economist at Jefferies & Co in New York. The benchmark 10-year note fell 12/32 in price on Thursday to yield 2.628 percent, from 2.584 percent late on Wednesday. The 30-year bond fell 20/32 in price to yield 3.684 percent, from 3.645 percent late on Wednesday. The Treasury had sold $35 billion in two-year notes on Tuesday and $35 billion in five-year notes on Wednesday. Markets are now pondering when the Fed might slow or stop its asset purchases, which are aimed at boosting employment. Two events next week could prove key in figuring out when that 'tapering' might start: a Fed policy meeting on Tuesday and Wednesday and U.S. labor market data on Friday. Investors will scour the Fed's statement on Wednesday after the meeting for clues about how policymakers view the health of the world's biggest economy. The payrolls data on Friday could also give clues about the economy's strength. Fed Chairman Ben Bernanke has emphasized the health of the labor market as a major factor in any Fed pullback decisions. Policymakers want to see the unemployment rate closer to 6.5 percent than its current 7.6 percent.