* Stocks up over 1 percent in each of major indexes
* Treasury yield curve in temporary steepening move
* Safety bids seen in shorter Treasury maturities
(Changes first paragraph, adds quotes, updates prices)
By Emily Flitter
NEW YORK, Aug 11 Longer-dated U.S. Treasury
prices fell on Thursday in choppy trading as bond dealers tried
to prepare for a 30-year bond auction amid more worries about
Treasuries gave way to pressure from rising stocks, with
the major indexes posting gains of around 1 percent each in
early U.S. trading.
But market activity in stocks and Treasuries alike was
still under the influence of rumors about problems with
European sovereign debt and their potential solutions.
"There are still concerns over the European banking
system," said Mark McCormick, a currency strategist at Brown
Brothers Harriman in New York.
"Peripheral CDS are up despite the negative turn in bond
yields. I think it's a signal that the European Central Bank is
out there buying peripheral debt and supporting the bonds while
people are still nervous about those countries."
The Treasury yield curve looked steeper, with heavy selling
taking place in 30-year bonds while two-year notes and
three-year notes remained unchanged in price.
"It's like a random walk here," said Raymond Remy, a trader
at Daiwa Securities in New York.
"The market's trading very thin. There isn't a lot of
volume trading at every price, which tells me maybe we're in
summer mode here, although it doesn't feel like we're in summer
mode. Everyone's got their eye on the stock market."
The 30-year Treasury bond was off more than a point in
price ahead of a 1 p.m. (1700 GMT) auction by the Treasury
Department of $16 billion in new 30-year bonds.
The 30-year Treasury bond US30YT=RR was last 1-9/32 lower
in price and yielding 3.58 percent, up from 3.52 percent at
The benchmark 10-year Treasury note US10YT=RR was
yielding 2.20 percent, up from 2.12 percent late on Wednesday.
The currency strategist McCormick said most of the money
coming out of stocks was going into shorter-dated Treasuries,
not 10-year notes and bonds.
"Most of the-people are a little bit skeptical about taking
duration risk right now," he said. "A lot of the safe-haven
bids are coming into the short end so you could see some
(Editing by Chizu Nomiyama)