* Benchmark yields hover above 14-month lows on safe-haven
* Worries persist about Gaza, Iraq and Ukraine
* Fed's Fischer rings caution on U.S. economic outlook
* Investors prepare for $67 bln August U.S. refunding
(Updates market action, adds fresh quote)
By Richard Leong
NEW YORK, Aug 11 U.S. government debt yields
were little changed on Monday, hovering near recent lows as
traders clung to their safe-haven bond holdings on anxiety about
tensions in the Middle East and Ukraine.
Benchmark 10-year yields were not far from last week's
14-month lows on bets that the possible spread of conflicts in
Iraq, eastern Ukraine and the Gaza Strip would hurt the global
Russian President Vladimir Putin said on Monday that his
nation will send an aid convoy to eastern Ukraine, a move the
West warned was a pretext to an invasion. Meanwhile, Iraqi Prime
Minister Nuri al-Maliki, whom Washington and Tehran blame for
causing the Sunni minority revolt in Iraq, refused to step down
after his replacement was named.
"Bond investors are not giving up yet on their safety bids.
They are keeping an eye on what's happening overseas," said
James Barnes, fixed income portfolio manager at National Penn
Investors Trust Co. in Wyomissing, Pennsylvania.
Benchmark yields were held down partly on comments by Fed
Vice Chairman Stanley Fischer, who said earlier on Monday that
the United States' subpar economic recovery since the financial
crisis has stemmed from a variety of factors, including
declining productivity and sluggish global demand.
Traders perceived his speech at a conference in Sweden as
implying that the U.S. central bank would not increase interest
rates until the second half of 2015 at the earliest.
On below-average volume, the yield on U.S. 10-year Treasury
notes was last at 2.420 percent, up 0.5 basis point
on the day and paring an earlier rise of 2.5 basis points. On
Friday, it fell to 2.349 percent, a level not seen since June
Wall Street share prices rose for a second day, with the
Standard & Poor's 500 index last up 0.28 percent.
Treasury yields rose initially on a 72-hour truce between
Israelis and Palestinians that afforded both sides time for
talks to end their month-old war in Gaza. U.S. airstrikes in
Iraq aimed at curbing the advance of Islamic State militants who
have taken over large swaths of that country also briefly pared
safe-haven bids for Treasuries.
On the supply front, the U.S. Treasury Department will begin
its $67 billion refunding later this week, which is estimated to
raise $9.3 billion in cash for the federal government. The
Treasury will sell $27 billion of three-year debt
In the "when-issued" market, the upcoming three-year note
issue due August 2017 was quoted to sell at a yield of 0.9190
percent, which would be the lowest yield in four months.
The quarterly refunding "should be okay, but if we make
another run lower in yields, it could be sloppy," said Larry
Milstein, head of government and agency trading at R.W.
Pressprich & Co in New York.
(Reporting by Richard Leong; Editing by Jonathan Oatis and Paul