TREASURIES-Bonds gain as Trump talks down the dollar

(Updates prices)

* Trump's comments on dollar spark safety buying

* Fed begins two-day meeting

* Heavy data week anticipated

By Karen Brettell

NEW YORK, Jan 31 (Reuters) - U.S. Treasury prices gained on

Tuesday after President Donald Trump expressed concern about the

value of the dollar, sending it lower and raising demand for

safe haven U.S. bonds.

In comments targeted to the pharmaceutical industry, Trump

said currency devaluation by other countries had increased

drugmakers' outsourcing their production and called on the

companies to make more of their products in the United States.

The remarks came after Trump's new National Trade Council

head Peter Navarro suggested that Germany was benefiting from a

"grossly undervalued" exchange rate.

"It's a significant change in policy in the dollar...it's

destabilizing," said Lou Brien, a market strategist at DRW

Trading in Chicago. "The fact that they are talking around (the

strong dollar policy) is going to upset the markets."

Data on Tuesday also showed consumer confidence fell from a

15-year high in January, while a Chicago survey found that

business production in the Midwest grew at a slower pace in

January.

"Part of the story was the data," said Brien.

Benchmark 10-year notes gained 11/32 in price to

yield 2.44 percent, down from 2.48 percent late on Monday and

the lowest level since Jan. 24.

Investors are preparing for a barrage of data this week,

culminating in Friday's jobs report for January, which they will

evaluate for further signs of the strength of the U.S. economy.

Employers are expected to have added 175,000 jobs in the

month, according to the median of 102 economists polled by

Reuters.

The U.S. Federal Reserve is expected to keep interest rates

unchanged when it concludes its two-day meeting on Wednesday, in

its first policy decision since Trump took office, as the

central bank awaits greater clarity on his economic policies.

"The Fed tomorrow will be interesting in gauging the

near-term policy bias, but no one's expecting anything in terms

of an actual increase or a definitive shift in their rhetoric,"

said Ian Lyngen, head of U.S. rates strategy at BMO Capital

Markets in New York.

"I think the market is expecting the tone to be more

optimistic and on the margin more hawkish," Lyngen said.

Treasuries are gained some support on Tuesday from demand

for them for month-end rebalancing.

(Editing by Lisa Von Ahn and Lisa Shumaker)