TREASURIES-U.S. yields inch higher on OPEC news, but downtrend intact

* Global bank risks still positive factor for Treasuries

* Fed's Yellen sees no meaningful rise in inflation

(Adds comment, updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, Sept 28 (Reuters) - U.S. long-dated Treasury debt

yields edged higher on Wednesday, boosted by a Reuters report

that OPEC has reached a deal to limit oil production, with the

agreement to be implemented in November.

U.S. crude futures and Wall Street shares rose on the news,

boosting risk sentiment.

According to sources, OPEC agreed to limit oil output to

32.5 million barrels per day.

But despite the recovery, U.S. yields, which move inversely

to prices, are still in the midst of a downturn, analysts said,

after the Federal Reserve left interest rates unchanged last

week and took a cautious stance on the U.S. economy.

Aside from the Fed outlook, problems at major banks and

economic data showing slow U.S. growth have bolstered

Treasuries' safe-haven appeal.

"You're not going to add risk in this kind of environment,"

said Jim Vogel, interest rate strategist at FTN Financial in

Memphis.

"It may be risk-off or risk-on but you're not going to

change your overall risk appetite as long as we have low growth

combined with events that tend toward a negative surprise."

Deutsche Bank (LSE: 0H7D.L - news) has been a focus this week as it faces a $14

billion legal battle with the U.S. government in connection with

the bank's issuance and underwriting of mortgage-backed

securities.

Wells Fargo (Hanover: NWT.HA - news) was also in the spotlight with its sales debacle

involving the creation of as many as 2 million accounts without

customers' permission.

Recent U.S. economic data have been far from stellar. On

Wednesday data showed that while U.S. durable goods orders beat

expectations, growth was flat for August. The government also

downwardly revised its July estimate to a 0.8 percent gain.

Fed Chair Janet Yellen testified before the House Financial

Services Committee and discussed the health of U.S. banks. But

in the question-and-answer session, Yellen commented on the U.S.

economy, noting that she is not seeing any meaningful upward

pressure on inflation, but expects the jobless rate to fall

further.

In afternoon trading, U.S. benchmark 10-year Treasury notes

were down 1/32 in price for a yield of 1.561,

compared with 1.556 percent late on Tuesday.

U.S. 30-year bonds slipped 3/32 in price, yielding 2.282

percent, up from Monday's 2.278 percent.

On the front end of the curve, U.S. two-year notes were flat

in price for a yield of 0.750 percent.

The U.S. Treasury's $28 billion seven-year note auction on

Wednesday was uninspiring, said some analysts. The yield was at

1.389 percent versus 1.390 percent just before the bid deadline.

Bids totaled $69.3 billion for a 2.47 bid-to-ratio cover,

better than 2.38 last month, but below the 2.50 average.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith (Stuttgart: MEZ.SG - news)

Mazzilli)