TREASURIES-Rise in Asia, await PPI and Empire State data

By Masayuki Kitano

TOKYO, April 15 (Reuters) - U.S. 10-year Treasury notes rose slightly in Asian trading on Tuesday, as investors awaited data on producer price inflation and manufacturing activity in New York for clues on the outlook for monetary policy.

With investors wary that signs of rising inflation could make it harder for the Fed to continue cutting interest rates to stimulate the economy, Treasuries could come under pressure if PPI rises faster than expected in March, analysts said.

"The market may react if there is any such rise, especially after the moves in oil prices yesterday and as data last week showed a rise in import prices," said Hiroki Shimazu, market economist for Mizuho Securities.

Investors may be more sensitive to any signs of inflationary pressures after U.S. crude oil futures settled at a record high on Monday and data released on Friday showed that U.S. import prices rose more than expected in March. [ID:nN14388291] [ID:nN11335609]

U.S. crude oil futures CLc1 continued to climb in Asian trading on Tuesday to hit an all-time high. [OIL]

Any losses in Treasuries, however, could be limited by concerns about U.S. corporate earnings and ongoing worries about U.S. banks' losses from the credit market turmoil, Shimazu said.

The 10-year Treasury note rose 2/32 in price to yield 3.505 percent <JP10YTN=JBTC>, down about one basis point from late U.S. trading on Monday.

The two-year note was steady with a yield of 1.754 percent <US2YT=RR>.