TREASURIES-Trim loss in Asia despite rally in gold and oil

TOKYO, Oct 26 (Reuters) - U.S. 10-year Treasury notes edged higher in Asian trading on Friday, trimming some of the losses suffered late in the U.S. trading the previous day and shrugging off gains in gold and oil.

U.S. Treasuries slipped on Thursday as stocks pared losses in a late rebound after a report quelled rumours that insurance giant American International Group (AIG.N) would post a big investment write-down.

Late Thursday, the CNBC cable television channel, citing unidentified sources, reported that it was untrue that AIG would report a big securities write-down. [ID:nN25112334].

Treasuries also suffered late in U.S. trading on Thursday as Microsoft Corp (MSFT.O) reported earnings that exceeded expectations, said a Treasuries trader for a U.S. investment bank in Tokyo.

After their overnight fall, Treasuries pared some losses in Asia on position squaring, market players said.

"It seems that Treasury yields are pulling back a bit because the rise in yields late in yesterday's trading was pretty rapid," said a portfolio manager for a Japanese insurer.

"It doesn't seem to be a move based on any kind of fresh factor," he said.

The 10-year Treasury note rose 4/32 in price to yield 4.372 percent US10YT=RR, inching towards the 4.30 percent level hit in early September that was the lowest since early 2006.

The 30-year Treasury bond rose 6.5/32 in price to yield 4.674 percent US30YT=RR.

Treasuries inched higher in Asia even though U.S. crude futures extended gains to hit a record high CLc1 on Friday and gold hit a 28-year high XAU=.

The Federal Reserve is widely expected to cut interest rates by 25 basis points to 4.5 percent at a two-day policy meeting to be held from next Tuesday, to counter a slowdown in the economy.

The market now seems to be bracing for a 25-basis-point rate cut next week and another 25-basis-point rate cut in December, said the portfolio manager for a Japanese insurer.

Later this session, focus will turn to the final October reading of Reuters/University of Michigan consumer sentiment at 1400 GMT, as well as moves in share prices. Economists' median forecast is for the headline reading to have slipped to 82.0 from 83.4, for current conditions to be 98.0 from 97.9 and for consumers' expectations to have slipped to 72.0 from 74.1.