TREASURIES-Prices slide as U.S. supply weighs

* US $62 bln supply in focus this week

* US 10-year yields now higher than Spain's

By Gertrude Chavez-Dreyfuss

NEW YORK (Frankfurt: HX6.F - news) , June 9 (Reuters) - Prices for U.S. Treasuries fell

on Monday, pressured by a $62 billion sale of new coupon-bearing

government debt this week and increased risk appetite following

a strong U.S. jobs report last Friday.

Yields on U.S. long-term securities rose for a second

straight day, helped by easing tensions between Russia and

Ukraine.

Ukraine and Russia will hold talks on Monday to avert a gas

war, a welcome sign that both countries are at least willing to

talk. The meeting is meant to prevent supply disruptions and

eventually take the heat out of the conflict in eastern Ukraine.

U.S. bond supply, however, remained the focus of the week,

with the $62 billion Treasury coupon auctions, beginning with

Tuesday's $28 billion three-year note sale. That will be

followed by the sale of $21 bln in 10-year notes on Wednesday,

and $13 billion in 30-year bonds.

"Some of today's weakness is just prepping for the auction

that's coming this week," said David Keeble, global head of

interest rates strategy at Credit Agricole (TLO: ACA.TI - news) in New York.

"It's the long ones on auction, so you've got to put

duration in the market and we're doing it now without much help

from Federal Reserve purchases that we've had before."

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

price to yield 2.622 percent, from 2.591 percent late on Friday.

For the first time since April 2010, Spanish 10-year yields

fell below those of U.S. Treasuries. Spanish yields hit historic

lows of 2.584 percent.

Italian five-year yields were also below U.S. equivalents,

highlighting the policy divergence between the European Central

Bank, which has launched further stimulus, and the Fed, which

has been reducing its asset purchases.

The impending end of the Fed's quantitative easing has been

helped by upbeat U.S. non-farm payrolls, which increased by

217,000 last month, returning employment to its pre-recession

level.

U.S. five year note prices were down 5/32 to yield 1.687

percent.

U.S. 30-year bonds fell 12/32 in price to yield 3.457

percent, from 3.432 percent late on Friday.

There's also a broad risk-on feel to the market, analysts

said.

"A spillover from Friday's good jobs report makes some sense

and you could also say that some of the news from Russia/Ukraine

has been a bit better, that they are finally seeming to talk to

each other," said Credit Agricole's Keeble.

(Editing by Nick Zieminski)