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Bonds News

TREASURIES-Bonds ease as housing data hits safe-haven bid

* Rise in U.S. pending home sales pushes bonds lower

* Losses limited by reluctance to push yields too high

* Range-bound rates expected, at least until Friday (Adds analysts quotes, updates prices)

NEW YORK, June 2 (Reuters) - U.S. Treasury debt prices eased on Tuesday after data showing a larger-than-expected rise in pending home sales added to recent signs of economic stabilization, eroding the safe-haven allure of government debt.

Losses were limited however, with investors reluctant to push rates too high a day after the biggest spike in benchmark yields in over eight months.

U.S. pending home sales, based on contracts signed in April, rose 6.7 percent, marking the biggest monthly increase since October 2001. Analysts had forecast a 0.5 percent rise. For details see [ID:nN02503338].

“The jump in pending home sales took the bond market down. If the housing market is bottoming, that exacerbates the pressure on Treasuries,” said John Spinello, chief fixed-income technical strategist at Jefferies & Co in New York.

Benchmark 10-year Treasury notes US10YT=RR were trading 10/32 lower in price for a yield of 3.71 percent, up from 3.68 percent late on Monday, and nearer the six-month high of 3.75 percent set last week.

Pending homes was “a very positive and encouraging number -- it plays into the ‘green shoot’, economy stabilization story,” said William Hornbarger, senior fixed income strategist at Wachovia Securities in St. Louis, Missouri.

The 30-year bond US30YT=RR was trading 9/32 lower in price for a yield of 4.55 percent from 4.54 percent late on Monday.

Despite the rise in prices on Tuesday, and Monday’s plunge in prices, investors expect trading to be relatively range bound, at least until the release of May non-farm payrolls data on Friday.

“We think the range is set at 3.38 percent to 3.88 percent” for the 10-year note yield, said Andrew Brenner, senior vice president at MF Global in New York.

Two-year notes US2YT=RR were flat in price for a yield of 0.95 percent, while five-year notes US5YT=RR were 5/32 lower for a yield of 2.56 percent from 2.53 percent late on Monday. (Additional reporting by Richard Leong and Ellen Freilich; Editing by Chizu Nomiyama )

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