TREASURIES OUTLOOK-Yields rise to three-week highs as oil prices gain

* Ten-year note yields highest since late March

* Improving risk sentiment reduces demand for U.S (Other OTC: UBGXF - news) . bonds

* Fed meeting next week in focus

By Karen Brettell

NEW YORK, April 20 (Reuters) - U.S. Treasury yields rose on

Wednesday to three-week highs, as oil and stock prices gained,

reducing demand for safe-haven bonds, and as new sales of

corporate debt also weighed on the market.

Oil prices rose 4 percent on Wednesday after data showed a

smaller-than-expected U.S. crude build, helping to also send

stock prices higher.

"The oil shift has been significant...if you look at the

'risk on' that's been in vogue for at least the last couple of

weeks, and now at oil breaking up to a new high, all those

things are weighing on the market," said Tom Tucci, head of

Treasuries trading at CIBC in New York.

Corporate debt sales by companies including Goldman Sachs (NYSE: GS-PB - news)

also pressured government bonds, in a week when no major

economic releases to sway investor sentiment were due.

Bonds saw additional weakness after yields broke above a

tight range that they had been trading in since the beginning of

April, leading some investors to unwind trades.

Benchmark 10-year note prices fell 20/32 to

yield 1.85 percent, up from 1.78 percent on Tuesday. Yields had

held between 1.81 percent and 1.69 percent since the beginning

of April.

"We're now moving through levels people once thought were

supportive and they are stopping some people out," said Tucci.

"It (Other OTC: ITGL - news) 's a little bit of a liquidation."

Investors focused on next week's Federal Reserve meeting,

which will be watched for any new indications on when the U.S.

central bank is next likely to raise rates.

The Fed is seen as unlikely to hike rates this month with

market-based indicators also showing low expectations, of only

around 11 percent, of a rate increase at its June meeting.

Low market expectations may encourage the Fed to adopt a

more hawkish tone so investors are prepared if the Fed decides

to raise rates, though policymakers are also wary of provoking

market panic that could derail their ability to execute a hike.

"I think they are going to try to sound a more hawkish note

 but if they try to tighten the market conditions up materially

then financial conditions could tighten too much," said Aaron

Kohli, an interest rate strategist at BMO Capital Markets in New (KOSDAQ: 160550.KQ - news)

York.

The European Central Bank is expected to reiterate its plans

to support the euro zone economy when it meets on Thursday.

(Reporting by Karen Brettell; Editing by Andrea Ricci)