* Treasuries prices ease as Italy, Spain bond yields fall
* U.S. bond investors take profits ahead of weekend
* U.S. deficit committee in focus, not yet moving bonds
By Karen Brettell
NEW YORK, Nov 18 U.S. Treasuries prices fell
on Friday as a decline in Italian government bond yields
dampened the safety bid for U.S. debt and some investors
unwound Treasuries purchases made over the past several days.
Italian and Spanish debt yields fell, though remained near
unsustainable levels, as traders said that the European
Central Bank intervened in markets in a bid to stem the
spiraling debt costs.
Investors were also optimistic after Dow Jones reported
that the European Central Bank may start lending funds to the
IMF to help struggling euro-zone countries.
France and Germany are at odds over whether the ECB should
intervene more forcefully to stem rising sovereign bond yields
in the region.
"We've had a little bit of a recovery today," said Rick
Klingman, a Treasuries trader at BNP Paribas in New York.
"Some of the flight-to-quality buying that has happened over
the last couple of days is being unwound."
The benchmark 10-year note fell 12/32 in price
to yield 2.01 percent, up from 1.97 percent late on Thursday.
The yields have fallen from 2.40 percent three weeks ago
as investors rushed to Treasuries on fears over spreading debt
problems in Europe, but they have struggled to stay below 2
percent as many investors see the debt as too rich, given
improving U.S. economic data.
Treasuries traders were also closely watching for progress
from a U.S. deficit-reduction committee, which faces a
Wednesday deadline to reach a deal to cut the deficit by at
least $1.2 trillion over 10 years.
"I'm hearing more and more talk about it," Klingman said.
"I think it will become more and more in focus, but it's
taking a back seat for now to the crisis in Europe."
The U.S. Federal Reserve will also buy between $2.25
billion and $2.75 billion in bonds due 2036 and 2041 on Friday
as part of its "Operation Twist" program, designed to help
reduce longer-term borrowing rates.