* U.S. to sell $35 billion in new two-year notes * Traders skeptical over debt deal for Greece * Fiscal cliff concerns underpin safety bids for bonds * Encouraging U.S. data curb demand for Treasuries By Richard Leong NEW YORK, Nov 27 (Reuters) - U.S. government debt prices were little changed on Tuesday in advance of a $35 billion auction of two-year note supply, part of this week's $99 billion in coupon-bearing supply. The bond market retraced overnight losses linked to news that international lenders agreed to a debt relief deal for Greece so it will obtain more financial aid to avoid a messy default, analysts said. The selloff in bonds faded when traders grew skeptical over the lack of details on how Greece will implement the budget reforms needed to meet its debt targets, they said. "It's the implementation risk. We have a 'penciled-in' agreement. That struck a bit of disappointment," said David Keeble, global head of interest rate strategy at Credit Agricole Corporate & Investment Bank in New York. Persistent worries about the lack of progress in Washington to avert a fiscal crisis, known as the "fiscal cliff," also underpinned support for bond prices. The absence of a budget compromise between U.S. President Barack Obama and federal lawmakers by year-end would cause a series of automatic tax hikes and spending cuts - worth $600 billion - to phase in during 2013. Economists warned such a fiscal contraction would push the world's biggest economy into a recession early next year. Uneasiness about United States and Greece's finances were offset by encouraging data on the U.S. economy. Durables orders came in unchanged in October, less weak than a 0.6 percent fall predicted by economists. Home prices in 20 major U.S. cities grew 0.4 percent in September, reinforcing the view of an improving real estate sector, the Standard & Poor's/Case-Shiller report released on Tuesday showed. Americans' optimism on the economy rose to its highest level in more than four years in November, according to the Conference Board On below-average trading volume, benchmark 10-year Treasury notes were up 2/32 in price at 99-22/32, yielding 1.659 percent. The 10-year yield has been stuck in the middle of its recent trading range. In "when-issued" trading, the two-year notes for sale at 1 p.m. (1800 GMT) were expected to clear at a yield of 0.2750 percent. The two-year auction in October fetched a "high" yield of 0.295 percent.