TREASURIES-Edge up in Asia after sell-off

By Masayuki Kitano

TOKYO, March 19 (Reuters) - U.S. 10-year Treasury notes clawed higher in Asian trading on Wednesday, trimming some losses after tumbling the previous day when a large Federal Reserve rate cut lifted stocks and prompted selling of safe-haven debt.

Two-year notes rose slightly while 30-year bonds fell, causing the yield differential between the two maturities to widen slightly to around 277 basis points.

Earlier this month the two-year/30-year yield spread rose above 300 basis points to the widest level in about four years, as two-year notes rallied on safe-haven buying.

Short-term Treasuries may have more room to rally in the near term due to worries about financial institutions' losses from the deterioration in credit markets, said Hiroki Shimazu, market economist for Mizuho Securities.

"I would not be surprised to see short- and medium-term Treasuries rise over the next couple of weeks," Shimazu said. Moves in the near term could be exacerbated by thin market conditions ahead of the three-day Easter weekend, he said.

The Treasury market will shut early on Thursday and be closed on Friday for a U.S. holiday.

Benchmark 10-year Treasury notes rose 4/32 in price to yield 3.489 percent <US10YT=RR>, down about 1 basis point from late U.S. trading on Tuesday but hovering above the 50-year low hit in 2003 of around 3.10 percent.

The 10-year yield rose 17 basis points on Tuesday in the biggest single-day leap in nearly four years.