TREASURIES-Yield curve slightly steeper as oil prices recover

(Adds TIPS auction results, auction schedule; Updates prices)

* Yield curve steepens from almost 10-year lows

* 30-year TIPS auction sees strong demand

By Sam Forgione and Karen Brettell

NEW YORK, June 22 (Reuters) - U.S. Treasury prices were

stable to slightly lower on Thursday while the yield curve was

slightly steeper, suggesting the flattening of the yield curve

this week was stalling on a rise in oil prices.

The yield curve between five-year notes and 30-year bonds

briefly flattened to 94.9 basis points, the

narrowest since December 2007, as 30-year Treasury yields hit

more than a seven-month low of 2.713 percent.

Later in the session, however, a recovery in U.S. crude

prices from Wednesday's 10-month lows suggested greater

inflationary pressures and pushed yields on long-dated bonds

slightly higher.

"At least today the long-end rally is taking a pause," said

Stanley Sun, interest rate strategist at Nomura Securities

International in New York.

The five-year, 30-year yield curve was last

96 basis points.

Yields on U.S. 30-year U.S. Treasuries have fallen since

data last week showed the so-called core Consumer Price Index

rose the least since May 2015.

Demand for a $5 billion sale of 30-year Treasury

Inflation-Protected Securities (TIPS) on Thursday was

nonetheless strong, resulting in a yield of 0.880 percent, lower

than what traders had expected.

The ratio of bids to the amount of 30-year TIPS offered

was 2.83, or the highest in a year. The ratio was

2.25 at the prior 30-year TIPS auction in February.

Analysts said yields on short-dated Treasuries, which are

most sensitive to Federal Reserve policy, remained stable to

slightly lower on skepticism that the U.S. central bank will

raise interest rates again this year.

"The timing for the next rate hike is definitely getting

pushed out," said Subadra Rajappa, head of U.S. rates strategy

at Societe Generale (Swiss: 519928.SW - news) in New York. "The market's not pricing in

aggressive rate hikes."

Federal Reserve Board Governor Jerome Powell, St. Louis Fed

President James Bullard and Cleveland Fed President Loretta

Mester are all due to speak on Friday.

The Treasury said on Thursday it will sell $88 billion in

notes next week, including $26 billion in two-year notes on

Monday, $34 billion in five-year notes on Tuesday and $28

billion in seven-year notes.

(Additional reporting by Richard Leong; Editing by Steve

Orlofsky)

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