TREASURIES-Prices fall as stock strength reduces demand for bonds

* Rising stocks reduces demand for bonds

* Rate outlook main focus for investors

* Personal (LSE: PGH.L - news) income, GDP data on Thursday in focus

By Karen Brettell

NEW YORK, Dec (Shanghai: 600875.SS - news) 20 (Reuters) - U.S. Treasury prices fell on

Tuesday as risk assets including stocks were stronger, reducing

demand for safe haven assets, and with no new economic due to

give further indications of the strength of the U.S. economy.

Bond prices had rallied on Monday as some investors covered

short positions and as terrorism concerns promoted by the

shooting of the Russian ambassador in Turkey and a truck attack

on a Berlin Christmas market raised demand for low-risk bonds.

U.S. stocks were nonetheless tentatively stronger on

Tuesday, while European stocks held near their highest levels

since January.

"The main reason for the increase today is the little bit of

'risk on' trading that buoyed European stock exchanges," said

Jim Vogel, an interest rate strategist at FTN Financial in

Memphis, Tennessee.

Benchmark 10-year notes were last down 10/32 to

yield 2.58 percent, up from 2.54 percent late Monday.

Investors are skittish to buy bonds on concerns about

further yield increases as they evaluate how many times the

Federal Reserve is likely to raise interest rates next year.

Hawkish comments by Fed Chair Janet Yellen on the state of

the job market on Monday sent yields briefly higher, even as

bonds were generally stronger.

It came after the U.S. central bank's meeting last Wednesday

was viewed as more hawkish than expected, sending 10-year note

yields to more than two-year highs and two-year note yields to

their highest levels since 2009.

"That was a basic repetition of almost anything she would

have said on the topic last Wednesday ... that's the sort of

sensitivity" investors have to hawkish rate statements, Vogel

said.

Data on Thursday, including the third estimate of

third-quarter gross domestic product and personal income and

spending, will next be watched for further indications about the

strength of the U.S. economy.

(Editing by Bill Trott)