TREASURIES-Prices rise on weak business, employment data

* Treasuries prices rise on weak economic data

* ISM non-manufacturing index slides; ADP employment falls

* Steep Nov job losses expected in Labor Dept data Friday

* Benchmark yields hover above lows not seen since 1955 (Updates prices, changes byline)

By Ellen Freilich

NEW YORK, Dec 3 (Reuters) - U.S. Treasuries prices rose on Wednesday, keeping benchmark yields near lows not seen since 1955, as more news of weakness in the service sector and labor market sustained the bid for safe-haven government debt even as stocks made notable gains.

A report showed U.S. private employers cut 250,000 jobs in November, suggesting that the government's more comprehensive non-farm payrolls report for November on Friday could show job losses reaching 400,000, analysts said.

The Institute for Supply Management (ISM) non-manufacturing business activity index plunged to a record low in November.

"The composite business activity index was low, but the 8.6 percent drop month over month in new orders didn't give us much hope going forward either," said Anthony Nieves, chair of the ISM non-manufacturing business survey committee.

Concern about potentially sharp job losses in the Labor Department's employment report due this Friday kept investors from taking profits in Treasuries, even though Treasuries prices have rallied and yields, which move inversely to prices, are at their lowest levels in more than five decades.

"The economic data today were so weak that the 'whisper number' for November non-farm job losses is now 400,000 instead of 325,000, so people who might normally be selling Treasuries are hesitating to do so," said Josh Stiles, senior bond strategist at IDEAglobal.

"Treasuries are extremely overbought so a big correction should be coming, but it's all a matter of timing," he said.

One factor that could have encouraged some selling in Treasuries is that stocks scored gains for the second day in a row. The gains, however, did not make up for the equity market's dramatic retreat on Monday.

"If stocks get to the point where they have erased Monday's loss, that would be more likely to trigger some pullback in Treasuries," Stiles said.

The benchmark 10-year U.S. Treasury note US10YT=RR rose 9/32, its yield easing to 2.67 percent from 2.70 percent late on Tuesday. On Monday, that yield fell as low as 2.65 percent, the lowest in over five decades, as stocks tumbled.

The two-year Treasury note US2YT=RR finished unchanged, yielding 0.90 percent, still below the Federal Reserve's target rate for overnight lending between banks of 1 percent.

The Institute for Supply Management's measure of the vast U.S. service sector slumped further than expected to a record low of 37.3 in November from 44.4 in October. A reading of 50 separates expansion from contraction.

"The severe damage to the service industry is another indication of the extraordinary force of this recession," said Pierre Ellis, senior economist at Decision Economics in New York.

The five-year Treasury note US5YT=RR rose 8/32 in price, its yield falling to 1.61 percent from 1.66 percent. The 30-year bond US30YT=RR rose 16/32 in price, driving its yield down to 3.17 percent from 3.19 percent on Tuesday. (Editing by Chizu Nomiyama)