* Chinese manufacturing output at 3-month high in October
* Treasury set to auction $35 billion of 5-year notes
* Fed decision due, expected to stay the course ahead of Nov. 6 U.S. election
NEW YORK, Oct 24 (Reuters) - U.S. Treasuries eased in price on Wednesday as the market prepared for more debt supply amid decreased appetite for low-risk assets following data from China that pointed to strengthening global growth. Investors were waiting for the results of the Federal Reserve's policy meeting on Wednesday afternoon, although they do not expect the central bank to change its current policy in the last meeting before presidential election on Nov. 6. Data showed growth in China's manufacturing sector shrank for a 12th successive month in October. But output was still at a three-month high and order books were at their most robust since April, signaling a strengthening recovery, preliminary results of a purchasing managers survey showed. The uptick in China's HSBC Flash Manufacturing Purchasing Managers Index (PMI), along with rises in new orders and output - its two biggest sub-components - and broad improvement in export orders, inventories and prices charged, all pointed to a turnaround in the world's second-biggest economy.
``Treasuries opened weaker on the back of decent selling in 10- to 30-year paper as Chinese Flash PMI came in stronger,'' said Tom di Galoma, managing director at Navigate Advisors LLC in Stamford, Connecticut. Benchmark 10-year notes were trading 5/32 lower in price to yield 1.78 percent, up from 1.76 percent late Tuesday but still below the 200-day moving average near 1.81 percent. Markets were preparing for more debt supply following solid demand in an auction of $35 billion of two-year notes on Tuesday. The Treasury will sell $35 billion of five-year notes on Wednesday and $29 billion of seven-year notes on Thursday. Ahead of Wednesday's sale, five-year notes on the when-issued market were yielding about 0.78 percent. On the open market, five-year notes were yielding 0.76 percent, compared with a high yield of 0.625 percent in an auction of the notes on Sept. 26. The Fed appears intent on sticking to its bond-buying stimulus, with analysts believing it will wait until at least December to make any changes to its current plans to buy $40 billion of mortgage debt per month. The Fed unveiled a third round of bond purchases last month. In Europe, Greece has been granted its long-standing plea for additional time to push through austerity cuts that have been finalized after months of negotiations, the finance minister said on Wed nesday. Data showing new U.S. single-family home sales surged in September to their highest level in nearly 2-1/2 years added to the bearish tone in Treasuries. ``It's firmer and consistent with the broader strength in housing reflected in a myriad of other reports,'' said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut. Thirty-year Treasury bonds were trading 14/32 lower in price to yield 2.93 percent, up from 2.89 percent late Tuesday.