TREASURIES OUTLOOK-Prices dip ahead of U.S. supply this week

* US $62 bln supply in focus this week

* US 10-year yields now higher than Spain's

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By Gertrude Chavez-Dreyfuss

NEW YORK (Frankfurt: HX6.F - news) , June 9 (Reuters) - U.S. Treasuries prices slipped

on Monday in quiet trading, pressured by a $62 billion sale of

new coupon-bearing government debt this week and steady risk

appetite following a strong U.S. jobs report last Friday.

Yields on U.S. long-term securities rose for a second

straight day, helped as well by easing tensions between Russia

and Ukraine, analysts said.

Officials from Ukraine and Russia met late on Monday in

last-minute talks brokered by the European Union to resolve a

dispute that could halt the flow of gas from Russia. Monday's

talks follow a tentative rapprochement last week when newly

installed Ukrainian President Petro Poroshenko and Russia's

Vladimir Putin met in France at commemorations of the World War

Two D-Day landings

U.S. bond supply, however, remained the focus of the week,

with the $62 billion Treasury coupon auctions, beginning with

Tuesday's $28 billion three-year note sale. That will be

followed by the sale of $21 bln in 10-year notes on Wednesday,

and $13 billion in 30-year bonds.

"Some of today's weakness is just prepping for the auction

that's coming this week," said David Keeble, global head of

interest rates strategy at Credit Agricole (TLO: ACA.TI - news) in New York.

"It's the long ones on auction, so you've got to put

duration in the market and we're doing it now without much help

from Federal Reserve purchases that we've had before."

Benchmark 10-year notes were last down 4/32 in

price to yield 2.613 percent, from 2.591 percent late on Friday.

For the first time since April 2010, Spanish 10-year yields

fell below those of U.S. Treasuries. Spanish yields hit historic

lows of 2.584 percent.

Italian five-year yields were also below U.S. equivalents,

highlighting the policy divergence between the European Central

Bank, which has launched further stimulus, and the Fed, which

has been reducing its asset purchases.

The impending end of the Fed's quantitative easing has been

helped by upbeat U.S. non-farm payrolls, which increased by

217,000 last month, returning employment to its pre-recession

level.

U.S. five year note prices were down 4/32 to yield 1.682

percent.

U.S. 30-year bonds fell 9/32 in price to yield 3.452 percent

, from 3.432 percent late on Friday.

Investors are now looking to Tuesday's U.S. three-year note

auction, which has seen mixed results in the past despite steady

demand.

Barclays Capital in a research note said on a three-month

moving average basis, domestic investment fund demand has

increased to 26 percent since February, while foreign investor

demand has declined by a similar proportion resulting in

broker-dealers still absorbing 56 percent of the auctioned

amount.

The New York Federal Reserve, meanwhile, bought on Monday

$0.97 billion in bonds with maturities ranging from February 15,

2036 through May 15, 2044. Offers totaled $4.559 billion.