TREASURIES-Treasuries prices gain as stocks fall, yield curve flattens

(Updates prices)

* Hong Kong civil unrest hurts risk assets, helps Treasuries

* 5-yr, 30-yr yield curve flattest since 2009

* Fears over Pimco redemptions increased volatility

By Karen Brettell

NEW YORK, Sept 29 (Reuters) - Treasuries prices gained on

Monday as civil unrest in Hong Kong weighed on global stock

markets, and the yield curve flattened as investors bet that

U.S. economic data would continue to improve.

Uncertainty around demonstrations in Hong Kong, where

protesters defied volleys of tear gas and police baton charges

to stand firm in the center of the global financial hub on

Monday, was seen as one driver of demand for bonds.

The bond gains came as investors waited on Friday's highly

anticipated jobs report for September for further signs that

growth is gaining traction.

"There is global uncertainty...you've got some worrying

protests in Hong Kong, overall it's quite thin and the markets

are really waiting for payrolls on Friday," said Gennadiy

Goldberg, an interest rate strategist at TD Securities in New

York.

Benchmark 10-year notes gained 13/32 in price to

yield 2.49 percent, down from 2.54 percent late on Friday.

Thirty-year bonds rose 25/32 in price to yield 3.18

percent, down from 3.22 percent.

Month-end buying may be adding to Treasuries demand, while

some gains were also seen as giving back weakness from Friday,

when fixed-income markets were weighed down by fears that bond

behemoth Pimco may have to sell assets if redemptions increase

after the departure of co-founder Bill Gross.

Volatility in rates spiked on Friday on concerns that Pimco

would unwind large positions it has that bet on low volatility.

"The idea was that Pimco has sold a lot of vol and they may

get out of some of those positions," said Ira Jersey, an

interest rate strategist at Credit Suisse (NYSE: CS - news) in New York.

A Credit Suisse index that measures volatility in swaptions

increased to 62 from 58 on Friday, Jersey said. Corporate credit

remained under pressure on Monday.

The yield curve between five-year notes and 30-year bonds

flattened to its lowest level in over five years on Monday as

investors bet that the economy will continue to gain traction.

Data on Monday showed that rising incomes helped American

consumers spend more in August, a positive sign for the U.S.

economy which appears to be shifting into a higher gear.

The five-year, 30-year yield curve flattened

to 140 basis points, down from a high of 146 basis points on

Friday.

(Editing by Chizu Nomiyama and Marguerita Choy)