* Treasuries give up early gains
* 30-year yield backs away from recent low
* Traders ready for Yellen testimony later in week
By Michael Connor
NEW YORK, May 5 (Reuters) - U.S. Treasuries eased on Monday after giving up early gains driven by global investors seeking shelter in government bonds and other safe-haven assets from increasing tensions in Ukraine.
Prices for 10-year notes were down 7/32 and were yielding 2.611 percent after trading on Friday as low as 2.57 percent, a three-month trough.
On Friday, when an unexpectedly strong payrolls report was undermined by worries about Ukraine, U.S. 30-year bond yields fell as low as 3.34 percent, their lowest level since June 19. But prices retreated on Monday and lifted yields to 3.4 percent in New York.
“There’s a little bid from Friday but the market is quiet with London and Japan closed,” said Kim Rupert, managing director at Action Economics. “Escalation of tension (in Ukraine) is keeping stocks on edge, especially in Europe and a little bit here too.”
Pro-Russian militants stormed a Ukrainian police station in Odessa on Sunday and freed nearly 70 fellow activists, two days after over 40 died in a blaze at a building they had occupied after clashes with pro-Kiev groups.
European stocks were stung by the news, as well as by economic data signalling China’s growth was slowing, and slipped in thin trade on Monday. Wall Street stocks opened lower, with major indices off about 0.5 percent.
“We have violence in Ukraine and China’s numbers are weaker. There’s a storm of information,” said Ellis Phifer, market strategist at Raymond James.
Traders were also readying for testimony before the U.S. Congress on Wednesday and Thursday by Federal Reserve Chair Janet Yellen that may provide clues to the central bank’s massive bond-buying program and the timing of interest rate hikes widely expected next year.
“Yellen will be key,” Phifer said. “She has moved markets at other times she’s spoken.”
Yellen will make few waves that will affect trading substantially, according to U.S. strategist Gennadiy Goldberg at TD Securities.
“Yellen likely (will strike) a relatively dovish tone while maintaining an optimistic outlook on the recovery amid recent signs of improvement,” Goldberg said.
“Yellen will likely attempt to downplay any suggestions that the Fed would hike faster than anticipated following last week’s stronger payroll report, stressing that substantial slack in the economy and contained price pressures will leave the Fed on hold for some time to come,” Goldberg said in a written commentary.
Reporting By Michael Connor in New York; Editing by Chizu Nomiyama