* Prices gain on weaker home data * Debt ceiling debate in focus, could add safety bid * Some T-bill rates fall on plan to extend debt ceiling By Karen Brettell NEW YORK, Jan 22U.S. Treasuries prices rose on Tuesday, erasing earlier losses, after weaker housing data raised concerns about the strength of the economic recovery, and as investors focused on negotiations in Washington over raising the U.S. debt ceiling. The National Association of Realtors said on Tuesday that U.S. existing home sales dropped 1.0 percent last month to a seasonally adjusted annual rate of 4.94 million units, below the median forecast of a 5.1 million-unit rate in a Reuters poll. That curbed earlier price losses suffered after U.S. Republicans proposed a limited rise in the debt ceiling as lawmakers wrangle over how to cut spending and reduce the U.S. deficit. "There was a little bit of a selloff in the morning and then there were a couple of pieces of data that come in relatively weak, so Treasuries rallied back," said Boris Rjavinski, an interest rate strategist at UBS in Stamford, Connecticut. Investors are more focused on economic data as they evaluate whether the Federal Reserve will end its bond purchase program this year, which most expect is dependent on a strong U.S. recovery. The Fed is buying longer-dated debt every day this week as part of its latest quantitative easing operation. At the same time the risk that lawmakers will not raise the debt ceiling, which could cause the government to delay payments on its debt, is expected to add a bid to longer-dated government bonds over the coming months. Some concerns about the potential for a technical default in February or March were eased after Republican leaders in the House of Representatives said they aim to pass a measure on Wednesday that would allow the government to borrow the money it needs to pay its bills for nearly four months more, to May 19. However, other fiscal deadlines loom, including a March 1 launch of automatic spending cuts and a March 27 expiration of funding for government agencies and programs. "While the threat of an imminent default has been removed, a repeat of the 2011 budget fight could prove destabilizing for the economy and financial markets," said Millan Mulraine, senior economist at TD Securities in New York. Yields on some Treasury bills that mature in February eased on the news that the debt ceiling fight may be pushed back. Rates on six-month Treasuries bills that mature on February 14 fell to 3 basis points on Tuesday, down from around 9 basis points a week ago. Treasuries bills are highly sensitive to the risk of being repaid late. Money market funds can't accept defaulted collateral to back loans in the repurchase agreement (repo) market and they pulled back on lending against the debt in mid-2011, when the ceiling was last an issue. Analysts expect that any fear over a potential default could make financing near-term debt maturities in the market very costly as lenders back away. "If there is an indication that people are getting spooked again then repo will potentially spike. It's not happening yet, but something to keep an eye on," said Rjavinski. Benchmark 10-year notes were last up 2/32 in price to yield 1.84 percent, little changed from Friday. Thirty-year bonds rose 5/32 in price to yield 3.02 percent, also little changed from Friday.