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* Prices dip as retail sales data point to stronger U.S. economy * Two-day price rally pauses after short-covering * Fed buys $1.39 bln bonds due 2038-23 By Karen Brettell NEW YORK, Jan 14 (Reuters) - U.S. Treasury debt prices fell on Tuesday after a gauge of U.S. consumer spending rose more than expected in December, suggesting the economy gathered steam at the end of last year and was poised for stronger growth in 2014. The Commerce Department said on Tuesday that U.S. retail sales, excluding automobiles, gasoline, building materials and food services, increased 0.7 percent last month after a 0.2 percent rise in November. The data follows a report on Friday that showed a weaker-than-expected jobs gain for December, which sent yields lower as some investors reevaluated bullish expectations for economic growth this year. "The data is better than expected, even though you had downward revisions in the last month," said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York. The fall in Treasuries prices paused a two-day rally as traders covered short positions set before the December payrolls report, with those shorts now having being taken out, Comiskey added. Investors also raised their holdings of longer-dated Treasuries after the jobs data, according to a survey released on Tuesday by J.P. Morgan Securities. The share of investors who on Monday said their holdings of longer-dated U.S. government debt were greater than their holdings of portfolio benchmarks rose to 19 percent from 13 percent a week earlier, J.P. Morgan said. Treasuries yields traded at session highs on Tuesday after the Federal Reserve announced the purchase of $1.39 billion in bonds due between 2038 and 2043, made as part of its ongoing purchase program. Benchmark U.S. 10-year Treasury notes were last trading down 7/32 in price to yield 2.861 percent, up from 2.825 percent late Monday. They have fallen from a high of 2.967 percent on Friday before the jobs data was released. Thirty-year bonds fell 10/32 in price to yield 3.799 percent, up from 3.766 percent. The Fed will purchase between $4 billion and $5 billion in notes due 2018 and 2019 on Wednesday. Philadelphia Fed President Charles Plosser and Dallas Fed President Richard Fisher are both due to speak later on Tuesday.