TREASURIES-Prices jump as Wall St slumps, investor fears multiply

* Early losses on strong service data reverse

* 10-year yields end under 2.5 percent

* Safety bid for Treasuries seen

(Recasts with price gains; adds quotes and late prices)

By Michael Connor

NEW YORK, Aug 5 (Reuters) - U.S. Treasuries' prices jumped

on Tuesday as Wall Street equities sold off and growing worries

over Ukraine and other issues spurred safe-haven buying of

American debt.

Reversing early rises on data showing the U.S. services

sector grew last month at its fastest pace since 2005, benchmark

10-year note yields were knocked well below 2.50

percent in late New York trading.

Investors were spooked by increasing tensions between Russia

and the West, falling prices for oil and other commodities, and

Argentina's unresolved debt default, said Richard Gilhooly,

macro strategist at TD Securities in New York.

Wall Street's leading stock indices were off about 1 percent

in broad selling clouded by worries about possible escalation of

military action in eastern Ukraine. Energy issues were

especially hard hit.

Investor (Other OTC: IVSBF - news) anxieties were also fanned by a shooting in

Afghanistan that left a U.S. general dead and more than a dozen

others wounded, according to strategist Sharon Stark at D.A.

Davidson in St Petersburg, Florida.

"It's a combination of the shooting in Afghanistan and

increasing tensions in the Ukraine," said Stark. "Just when

investors begin to feel a little comfortable, something else

happens."

In late New York trading, the 30-year Treasury bond

was up 10/32 in price to yield 3.28 percent, versus

3.29 percent at Monday's close. Earlier, in trading shaped by

bullish economic data, its yield was as high as 3.33 percent.

Ten-year notes were last ahead 3/32 in price to yield 2.48

percent, down from 2.49 percent at Monday's close.

Earlier, the Institute for Supply Management said its U.S.

services index rose to 58.7 last month, the highest since

December 2005, from 56.0 in June.

The reading blew past economists' forecasts of a 56.3

reading, according to a Reuters survey, and fanned speculation

Federal Reserve policymakers would speed up rate hikes now

expected in 2015.

Factory orders were also strong in July and data showed

positive revisions to durable goods orders, a sign that U.S.

manufacturing and the economy continue to improve, according to

a Commerce Department report. A survey on Friday showed new

orders at U.S. factories surged during July.

"Today's data on balance are better than expected so they

put some pressure on longer-dated Treasuries, but the volume is

light and they haven't changed the overall outlook on the

economy," said Guy LeBas, chief fixed income strategist at

Janney Montgomery Scott in Philadelphia.

(Reporting by Michael Connor in New York; Additional Reporting

by Richard Leong in New York; Editing by Dan Grebler)