* Putin outlines ceasefire plan; Ukranian PM calls it "deception"
* U.S. corporate supply will be major factor in September (Recasts with yields falling, updates comment and prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Sept 3 Benchmark U.S. Treasury debt yields fell from three-week highs on Wednesday, reversing earlier gains, as hopes over a proposed move to end fighting between Russia and Ukraine were clouded by doubts that peace would prevail.
Gains in Treasury prices, which move inversely to yields, were led by the U.S. 30-year bond, driving its yield down from two-week peaks.
While Russian President Vladimir Putin outlined plans for a ceasefire in eastern Ukraine on Wednesday, Ukraine's prime minister, Arseny Yatseniuk, dismissed the proposal. Yatseniuk said Russia's plan is a "deception" on the eve of a NATO summit that will discuss Ukraine. He added in a harshly worded statement: "The real plan of Putin is to destroy Ukraine and restore the Soviet Union."
"There's still quite a bit of uncertainty happening in Ukraine," said Tom di Galoma, head of fixed-income rates and credit trading at ED&F Man in New York.
"It looks to me that they floated a soft ceasefire because the American president is in Estonia and I think they are afraid that NATO is going to get together, so Putin has pulled back temporarily. But this conflict would go on in my view."
In late trading, U.S 10-year Treasury notes were up 3/32 in price to yield 2.40 percent, down from a yield of 2.42 percent late Tuesday. Yields earlier hit 2.46 percent, the highest level since Aug 13.
The U.S. 30-year Treasury bond was up 12/32 in price to yield 3.15 percent, down from 3.17 percent on Tuesday. Yields climbed to 3.21 percent earlier in the session, a two-week peak.
Di Galoma said that anytime Treasury debt prices cheapen, investors will buy them. "Investors continue to need duration," he said.
Earlier on Wednesday, Treasury yields were supported by a slew of U.S. corporate bond supply 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, said David Keeble, global head of interest rates strategy at Credit Agricole in New York, adding that supply pressures will continue to underpin yields. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Nick Zieminski and Leslie Adler)