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* U.S. durables goods post biggest fall since August * U.S. Treasury to sell $35 billion 5-year note supply * Hopes for new Italy government spur early bond sales * No lingering effect after Tuesday's tweet-linked rally By Richard Leong NEW YORK, April 24 (Reuters) - U.S. government debt prices were little changed on Wednesday as disappointing data on durable goods supported safe-haven demand for bonds and offset selling pressure from investors making room for this week's $99 billion coupon-bearing supply. A government report that showed domestic durable goods orders falling 5.7 percent in March - the biggest drop since August - follows a recent spate of weaker-than-expected data that has fueled worries of a spring U.S. slowdown for a third straight year. News that Italian President Giorgio Napolitano had picked center-left duty leader Enrico Letta as the new premier and had asked him to form a new government pressured U.S. bond prices downward and briefly lifted benchmark yields from their highest levels of the year set on Tuesday. The move stoked hopes that national leaders would turn their focus toward solving the fiscal problems that have bogged down Italy, the euro zone's third-biggest economy, but doubts persisted over whether Letta could cobble together a broad-based coalition for a confidence vote by next week. "There are changes coming in Italy, but they're painfully slow," said Stan Shipley, bond strategist at the ISI Group in New York. Benchmark 10-year Treasury notes were unchanged in price at 102-20/32 to yield 1.706 percent. The 10-year yield was about 6 basis points above a four-month plus low of 1.643 percent set on Tuesday after a false tweet from the Associated Press about explosions at the White House, which briefly sent stock prices plunging and bond prices soaring. There was little evidence of the tweet-related sell-off in Wednesday's trading. "Today it's not an issue," Shipley said. Uncertainties over the formation of an Italian government and the discouraging U.S. durable goods report, however, were not enough to snuff out investors' interest in stocks, which limited a rise in Treasuries prices, analysts said. This week's Treasuries supply has also capped any sustained upward move in bond prices. The U.S. Treasury Department will sell $35 billion in new five-year notes Wednesday, following average results at a two-year note sale on Tuesday. It will complete this week's debt offerings with a $29 billion seven-year debt auction on Thursday. In the "when-issued" sector, traders expected the upcoming five-year note issue due in April 2018 to sell at a yield of 0.717 percent, lower than the 0.760 percent yield at the five-year auction in March. The Federal Reserve will buy $1.25 billion to $1.75 billion in government debt at 11:00 a.m. EDT (1500 GMT) that will come due in February 2036 to February 2043. The operation is the latest of the central bank's program intended to hold down interest rates in an effort to support the economic recovery.