TREASURIES-Unchanged in Asia before U.S. sales data

TOKYO, Feb 13 (Reuters) - U.S. Treasuries barely moved in Asia on Wednesday, keeping the yield on two-year bonds near a four-year low, as investors awaited retail sales data due later in the day to better determine how much the economy is slowing.

Debt prices found their footing after stumbling on Tuesday following news that billionaire investor Warren Buffett had launched an offer to take over some of the liabilities held by struggling bond insurers, which had boosted stocks and cooled demand for safe-haven bonds.

Some investors picked up bonds on dips after the slide in the previous session, and dealers said that concerns about a weak economy and ongoing interest rate cuts by the Federal Reserve would continue to support the market.

Focus was on retail sales figures due at 1330 GMT. Sales are expected to have fallen 0.2 percent in January, adding to a 0.4 percent slide in December. Still, sales excluding autos are seen rising 0.2 percent last month.

"The market is expecting a weak reading, it's just a matter of how much weakness is already factored in," said a dealer at a Japanese trust bank.

"If a disappointing number does not trigger selling in stocks, we would see some downward pressure on Treasuries."

Also due is a reading on the U.S. trade deficit, which is projected to narrow moderately to $61.5 billion in December, from $63.12 billion in November.

Treasury futures TYv1 edged up 7/32 to 117-3.5/32.

Benchmark 10-year notes US10YT=RR rose 2/32 in price to yield 3.652 percent, down slightly from 3.662 percent on Tuesday.

Two-year notes US2YT=RR yielded 1.918 percent, unchanged from late New York trade and hovering in reach of the lowest level in roughly four years hit last month.

This kept the spread between two- and 10-year notes at around 173 basis points, around its widest since September 2004, and keeping intact a steepening bias in the yield curve.

Buffett said on Tuesday that he had offered to reinsure $800 billion of municipal debt guaranteed by three bond insurers, although so far one of the three had rebuffed him. [ID:nN12216014]

Even as the news drove U.S. stocks higher on Tuesday, market participants were sceptical that the plan would have a lasting impact on stocks and bonds, with Tokyo Treasury dealers saying that it was unlikely to solve the problems in the credit and U.S. subprime markets.

Investors were also anticipating testimony from Fed Chairman Ben Bernanke on Thursday, when he will appear before the U.S. Senate Banking Committee to speak about the state of the U.S. economy and financial markets. (Reporting by Naomi Tajitsu)