* Benchmark U.S. bond yields hover near two-month highs
* Chicago, New York Fed presidents set to speak
* U.S. Fed to buy $2.75 bln to $3.50 bln medium term bonds
By Richard Leong
NEW YORK, May 21 (Reuters) - U.S. government debt prices were little changed on Tuesday as investors moved to the sidelines in anticipation of possible clues on whether the Federal Reserve might consider curbing its bond purchases due to hints of an improving labor market.
Investors awaited clues on the central bank's bond purchase program, dubbed QE3, from Fed Chairman Ben Bernanke who will testify about the economy before a congressional panel on Wednesday at 10 a.m. (1400 GMT).
They will receive additional information on the thinking within the Federal Open Market Committee at 2 p.m. (1900 GMT) on Wednesday when the Fed's policy-setting group releases the records of its April 30-May 1 meeting.
"The market is just going very quiet before Bernanke and the FOMC minutes," said Lou Brien, market strategist at DRW Trading in Chicago.
Treasuries prices bounced within a tight range overnight on moderate volume with foreign appetite for longer-dated issues.
The bond market was also supported overnight by weaker-than-expected German and British inflation data following last week's report on the April U.S. consumer price index, which posted its biggest monthly fall in four years.
Benchmark 10-year Treasuries notes were flat in price, yielding 1.973 percent, about one basis point below the two-month high set last week.
The 30-year bond last traded 1/32 lower with a yield of 3.178 percent, up 0.3 basis point from late Monday.
Traders remained uneasy about jumping back into bonds, analysts said, with Wall Street stocks hovering near record peaks and speculation over whether the Fed will slow its $85 billion monthly purchases of Treasuries and mortgage-backed securities, a pillar of its current policy aimed to foster economic growth.
Some Fed policy-makers, even those perceived to be moderate or dovish about fighting inflation, seemed open to the Fed slowing or even stopping bond purchases later this year if evidence shows domestic job growth is on a sustained path.
On Monday, Chicago Fed President Charles Evans said he was "open-minded" to slowing the central bank's bond purchases as there has been "good progress in the labor market outlook."
Two regional Fed chiefs were scheduled to make public appearances on Tuesday - St. Louis Fed President James Bullard at an event in Germany at 11:30 a.m. (1530 GMT) and New York Fed President William Dudley at 1 p.m. (1700 GMT).
Amid speculation about the future of QE3, benchmark U.S. bond yields have climbed 30 basis points since the start of May. They also rose in reaction to a better-than-expected April jobs report and a surging dollar.
The U.S. central bank was set to buy $2.75 billion to $3.50 billion in Treasuries that will mature in Aug. 2020 to May 2023, which its latest purchase for its bond program known as QE3.
