TREASURIES-Bonds firm before supply, Fed rate policy in focus

* Bonds stable after Friday's selloff

* U.S (Other OTC: UBGXF - news) . to sell $24 bln 3-yr notes, $20 bln 10-yr notes

* Fed's Brainard comments in focus on Monday

By Karen Brettell

NEW YORK, Sept 12 (Reuters) - U.S. Treasuries were firm on

Monday as selling pressure from Friday appeared to abate before

the U.S. government is due to sell new supply and as investors

evaluate whether the Federal Reserve will raise interest rates

when it meets next week.

U.S. yields rose to two-month highs on Friday as assets from

bonds to stocks were sold, a day after a less dovish European

Central Bank President Mario Draghi disappointed investors by

failing to specify any new stimulus measures.

At the same time, investors are more skeptical that the Bank

of Japan has the capacity to offer new easing measures when it

meets next week, while some economists see the U.S. Federal

Reserve as likely to raise interest rates when it meets next

week.

"Overall, central banks are not going to be as

accommodative," said Justin Lederer, an interest rate strategist

at Cantor Fitzgerald in New York. Lederer added that "we've had

a decent backup and there's definitely some buyers of the dips."

Benchmark 10-year notes were last unchanged in

price to yield 1.69 percent. The yields jumped from a low of

1.53 percent on Thursday.

The recent backup in yields may help draw buyers to U.S.

debt auctions on Monday, though investors who see a rate hike as

possible next week may also be reluctant to buy bonds.

The Treasury Department will auction $24 billion in

three-year notes and $20 billion in 10-year notes on Monday,

part of $56 billion in new coupon-bearing supply this week. The

government will also sell $12 billion in 30-year bonds on

Tuesday.

Comments by Federal Reserve Governor Lael Brainard will be

in focus on Monday to see if she adopts a more hawkish tone

ahead of the U.S. central bank's highly anticipated meeting.

Traders see a 21 percent chance that the Fed will raise

rates this month, and a 54 percent chance that the Fed will

raise rates by December, according to the CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch

tool.

Atlanta Fed President Dennis Lockhart said on Monday that

current economic conditions warrant a "serious discussion" of

whether to raise interest rates at next week's meeting.

(Reporting by Karen Brettell; Editing by Will Dunham)