TREASURIES OUTLOOK-U.S. bonds post steepest weekly sell-off in two months

* Investors rethink view on protracted global low yields

* Traders brush off misses in U.S. factory, construction

data

* Benchmark yields post biggest weekly rise since early

March

* Treasuries lost 0.53 pct in April after March gains

-Barclays (Swiss: BARC.SW - news)

(Repeats to additional subscribers)

By Richard Leong

NEW YORK, May 1 (Reuters) - U.S. Treasuries prices fell on

Friday, marking the market's worst week in two months, as

traders who have been rethinking the global interest rate

outlook further bailed out of bullish bond bets.

Traders brushed off mild misses on U.S. data on

manufacturing and construction spending.

Investors have pared their holdings of U.S. government debt

since mid-April, as heavy debt supply and diminished pessimism

about Europe reduced the safe-haven allure of Treasuries, German

Bunds and British gilts.

"The fundamentals in Europe are turning and there may be an

acknowledgement of that," said Jeffrey Rosenberg, chief

investment strategist for fixed income at New York-based

BlackRock (NYSE: BLK - news) , the world's biggest asset manager.

The yield on benchmark 10-year Treasury notes

was up 7.5 basis points at 2.119 percent after hitting the

highest in nearly seven weeks at 2.124 percent. The 10-year

yield booked its biggest weekly rise since early March.

The German 10-year Bund yield jumped nearly 21

basis points on the week, the biggest such move since June 2013,

according to Reuters data.

Trading volume was light as major European markets were

closed for the May Day holiday.

For the month of April, U.S. Treasuries produced a total

loss of 0.53 percent, following a 0.63 percent gain in March, an

index compiled by Barclays (LSE: BARC.L - news) showed.

The selling in Treasuries has been mitigated by the absence

of a deal between Greece and its creditors and the view the

Federal Reserve will refrain from ending its near-zero interest

policy until September at the earliest.

Investors and Fed policy-makers will be attuned to signs of

an economic upturn after a measly 0.2 percent growth in the

first quarter.

The Institute for Supply Management said its monthly index

on national factory activity was unchanged at 51.5 in April,

matching the 22-month low set in March. Economists had forecast

an April figure of 52.0.

The government said construction spending fell 0.6 percent

in March to its lowest since September. Analysts had forecast a

0.5 percent rise.

These soft readings were offset by University of Michigan's

consumer sentiment index which ended April at 95.9, up from 93.0

in March. Car (HKSE: 0699.HK - news) makers were reporting stronger April sales than

March.

"You have a good foundation for the consumers so they could

carry the expansion," said Stephen Freedman, head of cross-asset

strategy with UBS Wealth Management Americas in New York.

(Reporting by Richard Leong; Editing by Chizu Nomiyama, David

Gregorio and Meredith Mazzilli)