TREASURIES-Bond yields fall on safety bids, reported Draghi comments

* U.S. stock market dip drives safe-haven bids

* U.S. yields follow European yields lower

* U.S. sells $29 bln in seven-year notes to weak demand (Updates prices)

By Sam Forgione

NEW YORK, Sept 25 (Reuters) - U.S. Treasuries yields fell on Thursday after a drop in U.S. stocks triggered safe-haven bids and reported comments from European Central Bank President Mario Draghi drove down rates in the euro zone, making U.S. yields more attractive.

Benchmark and long-dated Treasuries yields fell to their lowest level in more than two weeks after concerns over a strong U.S. dollar's impact on U.S. corporate earnings and a slump in Apple (NasdaqGS: AAPL - news) shares hurt U.S. stocks, and drove a flight to safety.

"A lot of today's action in Treasuries is fallout from the weakness on Wall Street," said Kim Rupert, managing director at Action Economcs in San Francisco.

A report published on Thursday quoted Draghi as pledging to do more stimulus in Europe if necessary. A day earlier, Draghi had said the ECB will keep monetary policy loose for as long as it takes to push ultra-low inflation in the euro zone back up closer to 2 percent.

After Thursday's report, German 10-year bund yields fell to an over two-week low of 0.968 percent, which fueled demand for higher-yielding U.S. Treasuries.

"In absolute terms, U.S. Treasury yields are certainly more attractive than their European counterparts," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia.

Despite the strong support for Treasuries, the Treasury sold $29 billion in seven-year Treasuries notes to weak demand. Overall bidding, as measured by the bid-to-cover ratio, was at 2.48, its lowest since June.

Economic data was mixed. The Commerce Department said durable goods orders dropped 18.2 percent in August, the largest decline since the series started in 1992. The drop, was roughly in line with economists' expectations for an 18 percent drop, according to a Reuters poll.

Markit (Stuttgart: A1139A - news) 's flash services sector Purchasing Managers Index slipped to 58.5 in September from 59.5 in August, declining for a third straight month. A Reuters poll forecast the September reading at 59.0.

Labor Department data, however, showed U.S. initial claims for state unemployment benefits rose to a seasonally adjusted 293,000 for the week ended Sept. 20, below expectations for a rise to 300,000 according to a Reuters poll.

Benchmark U.S. 10-year Treasury notes were last up 15/32 in price to yield 2.51 percent, from a yield of 2.57 percent late Wednesday. The yield hit 2.504 percent, its lowest since Sept. 10.

U.S. 30-year Treasury bonds were last up 1-3/32 to yield 3.22 percent, from a yield of 3.28 percent late Wednesday. The yield hit 3.211 percent, its lowest since Sept. 8.

On Wall Street, the benchmark S&P 500 broke below a key support level and was last down 1.52 percent. (Reporting by Sam Forgione; Editing by Meredith Mazzilli and Diane Craft)