TREASURIES-Bargain-hunting lifts bonds, selloff pauses

(Updates market prices)

By Richard Leong

NEW YORK, June 4 (Reuters) - U.S. Treasury debt prices rose on Monday as bargain-hunting emerged after weeks of heavy selling amid signs of renewed growth and fading prospects for the Federal Reserve to trim interest rates this year.

The market clung to modest gains despite a late recovery in stocks with the Dow Jones industrial average .DJI closing at a record high.

Stocks, whose strength had been a major negative factor for bonds, had started weaker after an 8 percent drop in Chinese stocks in the wake of last week's hike in the tax on stock trades.

"There are some bargain-hunters for whom these yields are somewhat attractive," said Terry Belton, head of U.S. fixed-income and derivatives strategy with J.P. Morgan Securities in Chicago.

The past month has been tough for Treasuries, with yields climbing as much as 40 basis points as improving economic data prompted investors to pare back expectations for the Fed to cut interest rates.

Benchmark 10-year notes <US10YT=RR> were traded up 5/32 in price for a 4.93 percent yield, down from 4.95 percent late on Friday and below the 10-month peak set late last week.

Monday's data on factory orders had little impact, but upward revisions to April durable goods did confirm a pickup in business investment early in the second quarter.