* Russia, Ukraine announce peace progress, triggering bond selloff
* U.S. corporate supply a major factor in Treasury debt selling
By Gertrude Chavez-Dreyfuss
NEW YORK, Sept 3 Benchmark U.S. Treasury debt yields rose to three-week highs on Wednesday, bolstered by a slew of U.S. corporate bond supply and efforts from Russia and Ukraine to end fighting.
U.S. 30-year Treasury bond yields also rose, hitting two-week peaks, as the Russia-Ukraine diplomacy pacified investors reeling from persistent global tensions this year.
Russian President Vladimir Putin said on Wednesday a deal to end fighting in eastern Ukraine could be reached this week, a clear attempt to show the West he was trying to deescalate the conflict despite renewed shelling.
"There has been a step forward on this end," said David Keeble, global head of interest rates strategy, at Credit Agricole in New York. "Putin does seem to be making the right noises and that hasn't been seen for a long, long time."
At the same time, Treasury yields were boosted by an onslaught of U.S. corporate debt issuance in September, after a quiet summer. There were about $21 billion in U.S. corporate bond issues announced on Tuesday and more new deals were identified on Wednesday, including a $1.25 billion bond issue from Lowe's Cos.
U.S. corporate bond supply have pushed the entire yield spectrum higher, Keeble said.
"The corporate supply calendar is pretty heavy," said Keeble. "The docket is filling up quite quickly, as well, and that is putting a little upward pressure on yields."
In mid-morning trading, U.S 10-year Treasury notes were down 7/32 in price to yield 2.44 percent, up from a yield of 2.42 percent late Tuesday. Yields earlier hit 2.46 percent, the highest since Aug 13.
U.S. 30-year Treasury bonds fell 12/32 in price to yield 3.19 percent, up from 3.17 percent on Tuesday. Yields climbed to 3.21 percent earlier in the session, a two-week peak. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Nick Zieminski)