TREASURIES-U.S. bond prices little changed as rally pauses

* Selling for profits, supply slows bond market rally * Economic worries, BoJ plan seen pushing yields lower * U.S. Treasury to sell $66 bln coupon-bearing debt * U.S. Fed to buy $1.0 billion to $1.5 billion TIPS By Richard Leong NEW YORK, April 8 (Reuters) - U.S. government debt prices were little changed on Monday as the market rally that began last week paused as investors booked profit and dealers prepared for this week's auctions of $66 billion in longer-dated Treasury debt. Benchmark yields hovered near their lows of the year which were set on Friday in the wake of a stunningly weak report on the domestic jobs market and Bank of Japan's plan to buy $1.4 trillion in assets. These two factors forced traders to downgrade their outlook on the U.S. economy and revised up their view on foreign appetite for dollar-denominated debt. "It's profit-taking and set-up for the auctions," Michael Cullinane, head of U.S. Treasuries trading at D.A. Davidson & Co. in St (BSE: STCORP.BO - news) . Petersburg, Florida, said of the factors behind the early market decline. "We should see good buying on any backup (rise) in yields." Benchmark 10-year Treasury notes last traded down 1/32 in price at 102-17/32 for a yield of 1.718 percent, up 0.4 basis point from late on Friday. Despite the modest backup, Treasury yields might revisit the historical lows seen last summer if the U.S. economy exhibits another mid-year slowdown like the previous two years. The 10-year yield broke below its 200-day moving yield on Friday, which had not happened since December. The breaching of this technical resistance suggested the likelihood 10-yield may test the historic intraday low of 1.3810 percent set in July. On Monday, the 30-year bond was down 3/32 at 104-28/32, yielding 2.880 percent, up 0.3 basis point from Friday's close and about 4 basis points above its lowest level of the year set on Friday. U.S. Treasuries lagged Japanese government debt as the 10-year yield premium over their Japanese counterpart grew to 1.195 percentage points from 1.179 points on Friday. The planned massive stimulus from the Bank of Japan has stoked bets on a spike in demand for higher-yielding U.S. Treasuries from domestic insurers and pension funds as the announced asset purchase plan knocked Japanese yields to record lows and the yen to multi-year troughs against the dollar and the euro. Like the U.S. Federal Reserve's bond purchase programs, the BoJ's quantitative monetary policy is aimed to lower long-term borrowing costs and stimulate spending and investments. Moreover, the depreciation of its currency should help Japanese exporters by making their goods cheaper abroad. Another source of support for U.S. bond prices has been the Fed's bond purchases. On Monday, the U.S. central bank was scheduled to buy $1.0 billion to $1.5 billion in Treasury Inflation-Protected Securities at 11 a.m. (1500 GMT). In light of the market rally that made Treasuries more expensive, analysts cautioned some investors might bid less aggressively for this week's government debt supply. The U.S. Treasury Department will sell $32 billion in three-year debt on Tuesday ; $21 billion in 10-year notes on Wednesday and $13 billion in 30-year bonds on Thursday.