TREASURIES-U.S. 10-year yields tumble to 5-week lows in line with Europe

(In second paragraph, corrects seven-week notes to seven-year

notes)

* European political uncertainty weighs on U.S. yields

* U.S. new home sales rise less than expected in January

* U.S. consumer sentiment eases in February

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 24 (Reuters) - U.S. benchmark 10-year Treasury

note yields dropped to five-week lows on Friday, pressured by

declines in Europe amid persistent political uncertainty and a

soft batch of U.S. data that suggested a more mixed outlook for

the world's largest economy.

U.S. 10-year yields, which move inversely to prices, lost

about 6 basis points on Friday, their largest one-day fall in

three weeks. U.S. 30-year bond yields were also on the

defensive, declining to two-week lows, as did two-year,

five-year and seven-year notes.

In Europe, German two-year yields fell to

record lows, while France's 10-year bond yield hit

a one-month low at 0.94 percent in a flight to safety.

"We remain reluctant to put too much stock into this week's

rally as global events steered all interest rates lower," said

Jim Vogel, interest rate strategist at FTN Financial in Memphis,

Tennessee.

"It wasn't but just three weeks ago that EU and U.S. rates

were going on their own paths, and the two can diverge again."

France and its looming election remain front and center in

terms of political risks for European government bond traders.

Investors fear far-right National Front leader Marine Le Pen

might win the presidential election this year and lead France

out of the euro zone. Current polls, however, show Le Pen (Other OTC: PENC - news) losing

either to centrist Emmanuel Macron or right-wing Francois

Fillon, but few people are willing to count her out.

Aside from France, there are also upcoming elections this

year in the Netherlands, Germany and possibly Italy.

In the United States, a lackluster set of U.S. data also

pressured bond yields, with new home sales growing less than

expected in January and consumer sentiment easing last month.

Overall, the market is still pricing in a rate hike in June,

with 65 percent probability, according to the CME's FedWatch.

Much of the focus next week though would be on U.S.

President Donald Trump's State of the Union address on Tuesday.

"If we don't get a credible policy doctrine and a

legislative timeline for tax reform, we believe markets will be

disappointed and rates can decline some more," said TD

Securities in its latest research note.

In afternoon trading, U.S. 10-year notes were up

18/32 in price to yield 2.322 percent, compared with 2.388

percent late Thursday. Yields fell as low as 2.313 percent, the

lowest since Jan. 17.

U.S. 30-year bond prices also rose, up more than

1 point, yielding 2.958 percent, down from Thursday's 3.023

percent. U.S. 30-year yields also touched a two-week low of

2.955 percent.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler

and Lisa Shumaker)