TREASURIES-Prices up on outlook for easing, safety bid

*Benchmark 10-year yields hover near five-decade lows

*Outlook for 50 bp Fed rate cut on Dec 16 supportive

*Prospective Fed purchases aid long-dated maturities

*Safe-haven bid cited even as stocks bounce (Updates quotes, prices, changes byline)

By Ellen Freilich

NEW YORK, Dec 2 (Reuters) - A safe-haven bid for U.S. government debt, rate cut anticipation, and the possibility that the Federal Reserve could buy long-dated Treasuries kept U.S. government securities in the plus column and benchmark yields near five-decade lows on Tuesday.

Stocks waxed and waned in positive territory, finally finishing higher, but their sharp tumble on Monday kept the bid for safe-haven U.S. government debt active.

Federal Reserve Chairman Ben Bernanke's remarks on Monday also continued to reverberate, analysts said, supporting a bid for long-dated Treasuries.

"The belief in the possibility that the Fed could purchase (long-dated) Treasuries, spurred on by Bernanke's comments yesterday, has certainly been a big factor," said John Canavan, analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.

Benchmark 10-year Treasury notes US10YT=RR rose 9/32 in price for a yield of 2.70 percent, from 2.73 percent late on Monday. Benchmark yields on Monday reached as low as 2.65 percent, the lowest in at least five decades.

On Monday, Bernanke said further cuts in overnight interest rates beneath the Fed's current target of 1 percent were "certainly feasible."

But Bernanke suggested the U.S. central bank would also use other unconventional measures to spur growth.

Bernanke said the Fed could directly purchase "substantial quantities" of longer-term securities issued by the U.S. Treasury or government-sponsored agencies to lower yields and to stimulate demand.

The Fed is widely expected to lower benchmark U.S. interest rates by a half-percentage point to 0.5 percent at its next scheduled meeting on Dec. 15-16. It is also expected to discuss what other policy tools could be used, and markets saw Bernanke's speech as a game plan for likely next steps.

"Bernanke was the engineer for so-called unconventional or quantitative easing so he will be inclined to do that if needed," Decision Economics economist Cary Leahey in New York.

Leahey said through its large open market operations and new credit facilities the Fed had already moved farther out on the maturity curve than was customary.

"In a sense the Fed is already engaged in 'quantitative easing' because it is buying longer-term commercial paper," Leahey said.

With benchmark yields hovering near five-decade lows, "you'd think there'd be room for profit-taking, but every time you turn around there's another reason not to," Canavan said.

"It is the fear trade," said Kim Rupert, managing director of fixed income analysis at Action Economics in San Francisco. "Nobody wants to get rid of their Treasuries any time soon."

The 2-year note US2YT=RR traded unchanged in price for a yield of 0.91 percent, which is below the Federal Reserve's 1.00 percent target rate for overnight lending between banks.

Thirty-year bonds US30YT=RR rose 10/32, their yields easing to 3.18 percent from 3.20 percent on Monday.

Long bond yields plunged on Monday to their lowest levels in at least 50 years.

Investors are looking ahead to non-farm payrolls data for November, due on Friday, for further market direction.

The median of forecasts from economists polled by Reuters is for payrolls to have fallen by 320,000 last month after shrinking by 240,000 in October. Employment dropped for the 10th straight month in October. (Additional reporting by Ros Krasny and Chris Reese; editing by Diane Craft)