TREASURIES-Prices rise on foreign demand, hold gains after spending data

* Prices fell Friday after Yellen's rate-hike remarks

* Bond buying continues on strong consumer spending data

By Dion Rabouin

NEW YORK, Aug 29 (Reuters) - U.S (Other OTC: UBGXF - news) . Treasury prices rose on

Monday as investors bought Treasuries following a market selloff

Friday that took yields on benchmark 10-year notes to their

highest since Britain's surprise vote to exit the European Union

late in June.

Comments from Federal Reserve Chair Janet Yellen and Vice

Chair Stanley Fischer on Friday, perceived as raising the

likelihood of the Fed boosting short-term interest rates this

year, spurred selling in Treasuries and provided an opening for

overseas investors seeking U.S. government debt, analysts said.

Yellen said at a three-day gathering of world central

bankers in Jackson Hole, Wyoming, that the case for raising

rates had strengthened in recent months. In a later television

interview, Fischer said Yellen's remarks were consistent with

the possibility of two rate hikes this year.

Their remarks were followed by a speech from Bank of Japan

Governor Haruhiko Kuroda in Jackson Hole who said the BOJ stood

ready to approve more quantitative easing or lower negative

interest rates "without hesitation" if conditions in Japan

continued to miss the bank's targets.

"The main reason we're seeing yields in the U.S. Treasury

market as low as they are at this point in time is because of

the overseas demand," said Lisa Hornby, U.S. fixed income

portfolio manager at Schroders (Frankfurt: 929969 - news) . "We're seeing consumers buying

most of the U.S. fixed-income products."

Benchmark 10-year U.S. Treasury prices rose

10/32 in price to yield 1.60 percent. Ten-year

Japanese government bonds, by comparison, yield -0.065 percent.

Treasuries maintained their price gains after U.S.

consumption and personal income data matched economists'

expectations for July. Consumer spending, which accounts for

more than two-thirds of U.S. economic activity, increased for a

fourth straight month in July and was revised higher for June.

While that was supportive of rising inflation that could put

point towards a Fed rate hike for the first time since December,

the data did not exceed expectations, meaning it should have

been priced in, Hornby (LSE: HRN.L - news) said.

"We're seeing inflation data certainly move higher over the

last several months and I expect it continues to do that," she

said. "But we're still below the Fed's target, which gives them

reason to push back against aggressive rate hiking."

(Editing by Bernadette Baum)