TREASURIES-Prices fall after jobless claims data; eyes on TIPS auction

* Jobless claims better than expected

* Philadelphia manufacturing data expected

* Treasury to sell $18 bln, five-year TIPS

* Bond market to close early Thursday, closed on Friday

By Karen Brettell

NEW YORK (Frankfurt: HX6.F - news) , April 17 (Reuters) - U.S. Treasuries prices fell

on Thursday after unexpectedly fewer Americans filed new claims

for unemployment, and ahead of the Treasury's scheduled sale of

$18 billion in new inflation-linked debt.

Initial claims for state unemployment benefits ticked up

2,000 to a seasonally adjusted 304,000 for the week ended April

12, the Labor Department said on Thursday. They stayed close to

a 6-1/2 year low touched the prior week.

Selling came after intermediate-dated debt weakened on

Wednesday after Federal Reserve Chair Janet Yellen took an

optimistic tone on the economy, but stressed any decision to

raise interest rates would hinge on healing in the labor market

and how briskly inflation rose toward the Fed's 2 percent goal.

"There is follow-through from yesterday, there was

significant selling in the middle of the curve," said Tom Tucci,

head of Treasuries trading at CIBC in New York. Low liquidity

before the early close is likely adding to the price pressure,

he added.

The bond market will close at 2 p.m. EDT (1800 GMT) on

Thursday and be closed all day on Friday for the Good Friday

holiday.

Benchmark 10-year notes were last down 7/32 in

price to yield 2.66 percent, up from 2.64 percent late on

Wednesday.

The yields have risen from one-and-a-half-month lows of 2.60

percent on Tuesday, when concerns about escalating tension in

Ukraine sparked safety buying and a weak New York manufacturing

survey raised fears over the strength of the U.S. recovery.

A Philadelphia manufacturing survey due later on Thursday

will be scrutinized for further signs of weak activity.

The Treasury is also due to sell $18 billion in five-year

Treasury inflation-protected securities, or TIPS, on Thursday,

testing demand for inflation-linked bonds as inflation continues

to run well below the Fed's 2 percent target.

Yellen said on Wednesday that persistently low inflation

poses a more immediate threat to the U.S. economy than rising

prices, stressing that the U.S. central bank would be delivering

policy stimulus for some time to come.

Data on Tuesday showed that U.S. consumer prices firmed a

bit in March, as food and housing rental costs rose in a

possible sign that a disinflationary trend had run its course.

(Editing by Paul Simao)