TREASURIES-Yields fall as buyers step in, emerging markets roiled
* Yields fall from two-year highs * Emerging market stress adds safety bid to Treasuries * Higher yields seen drawing buyers after recent backup * Fed buys $942 million in debt due 2024-2031 By Luciana Lopez and Karen Brettell NEW YORK, Aug 20 (Reuters) - U.S. Treasuries prices gained on Tuesday, breaking a week-and-a-half slump, as fears about the Federal Reserve pulling back on its purchases roiled emerging markets, adding a safe-haven bid to U.S. debt and as higher yields lured some buyers. Worries the Fed could soon slow its massive bond-buying program have sent 10-year yields soaring by more than full percentage point since the beginning of May. On Tuesday the impact of a Fed pullback was focused on emerging markets, where the Indian rupee fell to a record low, Indonesian markets tumbled and Turkey raised a key interest rate to halt a slide in its currency. "The ongoing meltdown in regional currencies is starting to negatively influence all risk assets and, for the moment, is helping create a bid for the Treasury market," said John Briggs, managing director and U.S. rate strategist at RBS in Stamford, Connecticut. U.S. bond investors have been moving to the sidelines on concerns over what impact a Fed reduction in purchases will have on the market, while some investors are also being forced to sell after getting caught in wrongway trades that were meant to benefit from a reduction in yields. Some investors have come back into the market after the recent yield backup, after benchmark 10-year yields rose to two-year highs of 2.90 percent on Monday. They fell to 2.83 percent on Tuesday. "The market had backed up to levels where valuations got particularly attractive," said Jake Lowery, a portfolio manager for global interest rates at ING U.S. Investment Management in Atlanta. The next focus for investors is the release on Wednesday of the Fed's meeting minutes from July, which will be evaluated for any signs of the pace and timing of a pullback from the $85 billion a month stimulus. A Reuters poll showed last Wednesday that a majority of economists expect the Fed to reduce bond purchases at its Sept. 17-18 policy meeting, with a consensus expecting the U.S. central bank would reduce purchases by $15 billion initially. The Fed bought $942 million in debt due from 2024 to 2031 on Tuesday as part of its ongoing purchase program. Traders are also speculating over who will take over from Fed Chairman Ben Bernanke, with President Barack Obama expected to announced the decision in the fall. Fed Vice Chairman Janet Yellen and former Treasury Secretary Lawrence Summers are considered the front-runners. The release of the Fed minutes on Wednesday will be followed by the annual policy conference held each year by the Fed in Jackson Hole, Wyoming, at the end of the week. Fed Chairman Ben Bernanke will not be attending, unlike in previous years.