TREASURIES-Economic woes, supply break buoy safe-haven bonds

* Weak Reuters/U. Michigan sentiment helps bonds

* Bond market relieved to have two weeks without supply

* Sagging stocks enhance allure of safe-haven debt (Updates with late New York trade, adds quote)

By Burton Frierson

NEW YORK, July 10 (Reuters) - U.S. Treasuries rallied on Friday, pushing benchmark yields to seven-week lows, as poor consumer sentiment data cast a favorable light on safe-haven bonds.

Consumer sentiment wilted in early July to the weakest since March, the Reuters/University of Michigan Surveys of Consumers showed, undermining stocks and making Treasuries look attractive by comparison.

Fixed income markets were also relieved to see an end to the $73 billion wave of government bond auctions this week and look forward to more than two weeks' of rest before the Treasury brings its next load of debt up for sale.

"We're very bullish here," said Carl Lantz, U.S. interest rate strategist at Credit Suisse in New York.

"The supply went down very easy and now we don't have supply for a couple weeks...Today's consumer confidence data again suggested we're some ways off from any kind of sustained recovery in demand."

The price on benchmark 10-year Treasury notes US10YT=RR was up one point, yielding 3.29 percent versus 3.41 percent at Thursday's close.

The 10-year yield fell as far as 3.26 percent, its lowest since May 21 and was on track for a third consecutive week of declines for the first time since December.

The 30-year long bond US30YT=RR rallied nearly two points, last trading up 1-30/32, yielding 4.19 percent versus 4.31 percent on Thursday.

Two-year notes US2YT=RR rose 2/32, pushing yields down to 0.91 percent from 0.94 percent on Thursday.

The absence of bond supply for the next two weeks could add to Friday's gains, said John Schatz, an interest rate strategist with Banc of America Securities Merrill Lynch in New York.

"It's obviously a short-term positive," Schatz said.

But he cautioned the supply factor remains a long-term negative for Treasuries due to the massive $2 trillion in new bonds the Treasury Department will issue this fiscal year to finance the burgeoning budget deficit.