* Early losses on strong service data reverse
* 10-year yields end under 2.5 percent
* Safety bid for Treasuries seen
(Recasts with price gains; adds quotes and late prices)
By Michael Connor
NEW YORK, Aug 5 U.S. Treasuries' prices jumped
on Tuesday as Wall Street equities sold off and growing worries
over Ukraine and other issues spurred safe-haven buying of
Reversing early rises on data showing the U.S. services
sector grew last month at its fastest pace since 2005, benchmark
10-year note yields were knocked well below 2.50
percent in late New York trading.
Investors were spooked by increasing tensions between Russia
and the West, falling prices for oil and other commodities, and
Argentina's unresolved debt default, said Richard Gilhooly,
macro strategist at TD Securities in New York.
Wall Street's leading stock indices were off about 1 percent
in broad selling clouded by worries about possible escalation of
military action in eastern Ukraine. Energy issues were
especially hard hit.
Investor anxieties were also fanned by a shooting in
Afghanistan that left a U.S. general dead and more than a dozen
others wounded, according to strategist Sharon Stark at D.A.
Davidson in St Petersburg, Florida.
"It's a combination of the shooting in Afghanistan and
increasing tensions in the Ukraine," said Stark. "Just when
investors begin to feel a little comfortable, something else
In late New York trading, the 30-year Treasury bond
was up 10/32 in price to yield 3.28 percent, versus
3.29 percent at Monday's close. Earlier, in trading shaped by
bullish economic data, its yield was as high as 3.33 percent.
Ten-year notes were last ahead 3/32 in price to yield 2.48
percent, down from 2.49 percent at Monday's close.
Earlier, the Institute for Supply Management said its U.S.
services index rose to 58.7 last month, the highest since
December 2005, from 56.0 in June.
The reading blew past economists' forecasts of a 56.3
reading, according to a Reuters survey, and fanned speculation
Federal Reserve policymakers would speed up rate hikes now
expected in 2015.
Factory orders were also strong in July and data showed
positive revisions to durable goods orders, a sign that U.S.
manufacturing and the economy continue to improve, according to
a Commerce Department report. A survey on Friday showed new
orders at U.S. factories surged during July.
"Today's data on balance are better than expected so they
put some pressure on longer-dated Treasuries, but the volume is
light and they haven't changed the overall outlook on the
economy," said Guy LeBas, chief fixed income strategist at
Janney Montgomery Scott in Philadelphia.
(Reporting by Michael Connor in New York; Additional Reporting
by Richard Leong in New York; Editing by Dan Grebler)