TREASURIES-Yields rise as investors focus on Fed meeting this week

* Fed meeting in focus for rate hike signals

* Fed seen likely to announce balance sheet reductions

By Karen Brettell

NEW YORK, Sept 18 (Reuters) - U.S. Treasury prices fell on

Monday as investors focused on the Federal Reserve's two-day

policy meeting this week for signals on whether an additional

interest rate hike is likely this year.

The U.S. central bank is widely expected to announce at the

conclusion of its meeting on Wednesday that it will begin paring

its massive portfolio of Treasuries and mortgage-backed

securities, with the reductions likely to start this year.

Less certain is whether the policy-setting Federal Open

Market Committee will raise rates again by the end of the year.

Interest rate futures traders are pricing in a 57 percent chance

of a hike at the December meeting, according to CME Group (Kuala Lumpur: 7018.KL - news) ’s

FedWatch Tool.

"The key market moving event for this week is the FOMC,"

said Subadra Rajappa, head of U.S. rates strategy at Societe

Generale in New York. "The debate in the market is whether the

Fed will be able to raise rates at the December meeting, given

the trajectory of inflation."

Treasury yields have jumped since data on Thursday showed

that U.S. consumer prices accelerated in August, easing concerns

that inflation would disappoint with another weak print.

The Consumer Price Index (CPI) rose 0.4 percent last month,

the largest rise in seven months.

"Last week's CPI number was a step in the right direction.

If we maintain this trajectory during the second half of the

year, then I think they will be well on their way to hiking in

December," Rajappa said.

Concerns about North Korean missile tests have also eased,

helping yields rise from nine-month lows a little more than a

week ago.

Benchmark 10-year notes were last down 6/32 in

price to yield 2.222 percent. The yield fell to 2.016 percent on

Sept. 8, the lowest level since Nov. 10.

(Editing by Paul Simao)

)