TREASURIES-Prices rise on safety buying as Ukraine tensions rise

(Recasts with Ukraine, adds quote, details)

* Prices gain as Ukraine tensions spark safety buying

* NY manufacturing disappoints, inflation data benign

* Fed buys $2.20 bln notes due 2020, 2021

By Karen Brettell

NEW YORK (Frankfurt: HX6.F - news) , April 15 (Reuters) - U.S. Treasuries prices gained

on Tuesday as rising tensions in Ukraine sparked a safety bid

for U.S. bonds, and after a weak manufacturing survey for New

York state pointed to sluggish economic momentum.

Russia declared Ukraine on the brink of civil war on Tuesday

as Kiev said an "anti-terrorist operation" against pro-Moscow

separatists was under way, with troops and armored personnel

carriers seen near a flashpoint eastern town.

Concerns over escalating conflict added to bond purchases,

after a gauge of manufacturing in New York state earlier grew at

a slower rate than the previous month, and below expectations in

April.

"It added to the Treasuries rally in the long-end, emerging

markets overall are getting hit harder," said Michael Chang, an

interest rate strategist at Credit Suisse (NYSE: CS - news) in New York.

Benchmark 10-year notes were up 6/32 in price to

yield 2.63 percent, down from 2.66 percent earlier on Tuesday.

Thirty-year bonds gained 14/32 in price to yield

3.47 percent, down from 3.50 percent earlier.

Shorter-dated Treasuries yields briefly rose earlier on

Tuesday after the Labor Department also said on Tuesday its

Consumer Price Index increased 0.2 percent last month as a rise

in food and shelter costs offset a decline in gasoline prices.

The CPI index had gained 0.1 percent in February.

The data comes as the Treasury is due on Thursday to sell

$18 billion in five-year Treasury inflation-protected securities

(TIPS).

U.S. inflation-linked bonds have been among the worst

performers since the Fed last year indicated that it would begin

tapering its bond purchases, with investors worrying over what

catalyst will lead inflation higher.

Investors are focused on a busy week of data releases for

signs on the strength of the economy as the Federal Reserve

pares its bond purchases, and look toward interest rate hikes

that most expect to begin next year.

Housing data on Wednesday will be evaluated to see if

activity picked up, after months of subdued data that many blame

on bad weather.

"When the clouds part if we don't get a lift to housing that

could be a big issue," said Gennadiy Goldberg, an interest rate

strategist at TD Securities in New York.

A Philadelphia manufacturing survey released on Thursday

will also be a focus after Tuesday's weak New York report.

Fed Chair Janet Yellen will also speak on Wednesday about

the economy. She spoke on Tuesday about markets regulation, but

did not discuss monetary policy.

The Fed bought $2.20 billion in notes due 2020 and 2021 on

Tuesday as part of its ongoing purchase program.

(Editing by Andrew Hay)