TREASURIES-U.S. yields inch lower as Ukraine-Russia tension weighs

* Ukraine asks Russia to explain military exercises

* U.S. 7-year auction goes well; indirect bidders ramp up purchases (Recasts, update prices, adds comment)

By Gertrude Chavez-Dreyfuss

NEW YORK (Frankfurt: HX6.F - news) , April 24 (Reuters) - U.S. Treasury long bond yields fell for a third straight session on Thursday, as renewed tensions between Ukraine and Russia wiped out earlier gains posted after the release of positive economic numbers.

Yields on benchmark 10-year Treasuries slipped as well, down for a second consecutive day, as markets failed to nudge them above their 200-day moving average of 2.7271 percent, prompting short-covering.

The conflict between Russia and Ukraine added a tone of uncertainty to the market, nullifying some of the goodwill brought on by strong U.S. durable goods data and robust earnings overnight from Apple Inc (NasdaqGS: AAPL - news) .

"To some extent, we have been tracking the ups and downs in equities," said Kim Rupert, managing director for fixed income at Action Economics in San Francisco. "We had pretty decent earnings overnight and that gave equities a boost, but the Ukraine tensions heated up and as a result we saw yields come down a bit."

Russia started military drills near the Ukrainian border on Thursday in response to operations by Ukrainian forces against pro-Russian separatists and to NATO exercises in Eastern Europe, Defense Minister Sergei Shoigu was quoted as saying by the Interfax news agency.

In response, Ukraine has asked Moscow, under European OSCE security arrangements, to explain and give details of its military exercises near the border within 48 hours, the Foreign Ministry said on Thursday.

The benchmark 10-year U.S. Treasury note was down 1/32 in price to yield 2.68 percent, compared with 2.70 percent late Wednesday. Prices of 30-year Treasury bonds (Shenzhen: 395031.SZ - news) were up 3/32 to yield 3.46 percent, compared with 3.48 percent the previous session.

Yields were much higher at the start of Thursday's session, after data showed orders of long-lasting goods, or durables, rose more than expected in March. A separate report said U.S. continuing jobless claims were the lowest since December 2007, which bodes well for the U.S. labor market. Both economic numbers initially spurred a move away from safe-haven Treasuries.

"The durable goods number is just supporting the idea of a decent bounce-back after a poor winter and that we are gradually pulling ourselves out," said David Keeble, global head of interest rate strategy at Credit Agricole (TLO: ACA.TI - news) in New York.

An unusually cold and snowy winter disrupted economic activity at the end of 2013 and the beginning of this year, holding back job growth and weighing on industrial production.

Meanwhile, a decent $29 billion seven-year auction also helped Treasuries trim losses. The latest seven-year sale cleared at a yield of 2.317 percent, the highest since December.

The bid-to-cover ratio was a solid 2.60 versus the average of the past six auctions of 2.57 times. Indirect bidders aggressively pursued Thursday's sale, marking the end of this week's $96 billion supply of coupon-bearing government debt.

Indirect bidders, mostly foreign central banks, ramped up their purchases of this maturity from March, accounting for 49.9 percent of the amount the Treasury Department awarded. This was the biggest share of indirect purchases since August 2011. (Additional reporting by Richard Leong; Editing by Steve Orlofsky)