TREASURIES-Yields rise on new supply, economic uncertainty

* Prices drop as selling increases; economic data mixed

* Treasury sells $9 bln TIPS to tepid demand

* Fed buys $2.66 bln notes due 2022 and 2023

* Fed to buy $1 bln-$1.25 bln bonds due 2036-2044 Friday

By Karen Brettell

NEW YORK (Frankfurt: HX6.F - news) , Feb 20 (Reuters) - U.S. Treasuries yields rose

back to the higher end of their recent range on Thursday as

traders reported an uptick in investors selling bonds and

prepared for new Treasury supply next week.

Treasuries yields have held in a relatively tight range in

the past two weeks as investors evaluate whether a recent spate

of weakening economic data reflects a slowing economy or

transitory weakness due to bad weather.

Questions over the strength of the economy and a safety bid

from volatility in emerging markets have also pushed yields

below where some analysts see their fair value.

The current 10-year yield "is partly due to the emerging

market crisis and party due to economic data that has

disappointed  It's really been the surprise factor in U.S.

economic data that's kept rates much lower" than they should be,

said Aaron Kohli, an interest rate strategist at BNP Paribas (Milan: BNP.MI - news) in

New York.

BNP (Paris: FR0000131104 - news) sees benchmark 10-year yields as fairly

valued at between 3.00 percent and 3.25 percent, a quarter of a

percentage point higher than their current levels of 2.76

percent.

Data earlier on Thursday was mixed with weekly jobless

claims edging down and consumer prices inching higher. A

manufacturing survey in the mid-Atlantic (Frankfurt: 98S.F - news) region also tumbled to

the lowest in a year, while a survey of national factory

activity grew in February at its fastest pace in nearly four

years.

Investors will monitor existing home sales data, set to be

released on Friday, but they said they expect consumer

confidence figures, due on Tuesday, to have a more significant

impact on the market.

Five-year and seven-year notes were the worst performers on

Thursday before new supply of the notes next week.

The government said on Thursday it will sell $96 billion in

new coupon-bearing supply next week, including $32 billion in

two-year notes, $35 billion in five-year notes and $29 billion

in seven-year notes.

Five-year notes fell 4/32 in price to yield 1.55

percent, up from 1.51 percent and seven-year notes

were also down 3/32 in price to yield 2.19 percent, up from 2.16

percent.

Stocks also gained on Thursday, reducing demand for U.S.

government bonds.

The Treasury also sold $9 billion in new 30-year Treasury

Inflation-Protected Securities (TIPS) on Thursday at a high

yield of 1.495 percent, around 2 basis points higher than where

the debt had traded before the sale.

The auction saw relatively low demand with a bid-to-offer

ratio of 2.34 times, the lowest level since the government

reintroduced the maturity in February 2010. There was

nonetheless strong demand from indirect bidders, which include

mutual funds and some central banks, who took 56 percent of the

sale.

The Fed bought $2.66 billion in notes due in 2022 and 2023

on Thursday as part of its ongoing purchase program. It will buy

between $1 billion and $1.25 billion in bonds due 2036 and 2044

on Friday.