TREASURIES-Plummet in Asia on global stock rally

* Plummet as stocks rally globally

* Nikkei jumps 13 pct as fear toward risk eases

* Eurodollar futures climb on expectations of lower Libor

TOKYO, Oct 14 (Reuters) - U.S. Treasuries plummeted in Asia on Tuesday as investor demand for the safety of government debt was curbed after stock markets around the world rallied.

Bourses across Asia climbed sharply as fear toward risk partially eased after key central banks agreed to a list of steps aimed at reviving interbank lending and restoring credit market liquidity.

Japan's Nikkei stock average .N225 jumped 13 percent on Tuesday following the best single days ever on Wall Street the previous day.

"The tumble in equities around the world last week was overdone. Stock markets now have the reasons for a sustained bounce, and Treasuries are likely to be pressured accordingly," said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC.

Two-year notes fell 20/32 in price US2YT=RR to yield 1.917 prcent from 1.607 percent in late U.S. trade on Friday.

Benchmark 10-year notes US10YT=RR dropped 1-9/32 in price to yield 4.036 percent from 3.874 percent.

The cash Treasury market was closed in the United States on Monday for the Columbus Day holiday. The Japanese markets were also closed on Monday for a public holiday.

Analysts said longer-dated Treasuries appeared more vulnerable as the U.S. government has to rely heavily on debt to fund its rescue projects.

"The steps the U.S. government is undertaking to shore up the financial system involves a lot of spending, which will weigh the most on Treasuries of longer duration," said Nagai at Daiwa Securities SMBC.

The very short-end of the yield curve, on the other hand, has enjoyed better support even as short-term Treasury yields soared on surging stocks.

Three-month eurodollar futures EDZ8 climbed 17 basis points on expectations that London interbank offered rates (Libor) will continue to decline in the coming days and weeks thanks to big government efforts to revive interbank lending.

"The overall expectation is that Libor is coming down," said Joseph Kraft, head of Japan capital markets at Dresdner Kleinwert.

Three-month dollar Libor was set 6.6 basis points lower on Monday at 4.7525 percent in the first sign that the array of planned capital injections into the global banking system was improving confidence.