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TREASURIES-Prices sag as Wall St rallies, corporate debt deals drag

Reuters - UK Focus

* Equities gains, big Amazon deal pressuring prices

* 30-year bond yield tops 3 percent (Adds Wall St rally, Amazon details and quotes)

By Michael Connor

NEW YORK, Dec 2 (Reuters) - U.S. Treasuries fell on Tuesday, with prices pressured by a Wall Street rally and institutional investors readying for a $6 billion corporate bond deal from leading retailer Amazon.

U.S. equities pivoted from losses on Monday and were boosted by merger deals. Key indices were up about 0.5 percent in late New York trading on Tuesday.

"Today was primarily about the rebound in equity prices," said Ian Lyngen, senior government bond strategist at CRT Capital (Other OTC: CGHC - news) in Stamford, Connecticut.

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Big corporate bond deals also weighed on Treasuries, Lyngen said. Treasuries ended a six-session price rally on Monday, when Medtronic Inc (NYSE: MDT - news) priced $17 billion of senior notes.

"There is a lot of corporate issuance that's being hedged and that's applying a lot of pressure," said Sean Murphy, a Treasuries trader at Societe Generale (Paris: FR0000130809 - news) in New York.

Hedging against expected exposure to corporate deals can at times pressure bonds, as investors conduct trades known as "rate-locking" that involves selling Treasuries to offset coming purchases of corporate bonds.

According to IFR, a unit of Thomson Reuters, Bank of America and other banks working for Amazon were expected to price on Tuesday a five-part senior unsecured offering for the online retailer worth $6 billion.

Yields on 30-year Treasuries topped 3 percent after data showed U.S. construction spending in October was healthier than forecast. The bond was last off 1-2/32 and yielded 2.9984 percent, according to Reuters data.

The 10-year Treasury was last off 17-1/2 to yield 2.2799 percent.

This week's declines in Treasuries follow strong gains in long maturities during November, according to Kevin Horan, director of fixed income indices at S&P Dow Jones Indices.

Ten-year Treasuries tracked by the S&P/BGCantor Current 10 Year U.S. Treasury Bond Index also tightened by 16 basis points, Horan said.

(Additional Reporting By Richard Leong in New York Editing by W Simon and Chizu Nomiyama)