TREASURIES-Prices drop as Fed sees growing doubts on bond buying
* Fed to keep buying bonds, but doubts inside bank growing
* ADP Dec private employment rises by more than expected
* Price losses limited by worries over coming political battle
NEW YORK, Jan 3 (Reuters) - U.S. Treasury debt prices sank on Thursday after the Federal Reserve said doubts were growing within the bank over its bond-buying program, as stronger-than-expected jobs data boosted hopes for employment figures later in the week. While the Fed said that it would keep buying bonds to boost the economy over coming months, December meeting minutes underscored a growing reticence about more increases to the central bank's $2.9 trillion balance sheet. "Several (officials) thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet," the minutes said. Ten- and 30-year U.S. government debt sold off sharply after the document was released. "I think the bottom line is that the policy is likely to be in place for a while, but the minutes seems to be raising some doubts about the commitment to the policy," said Julia Coronado, chief North America economist at BNP Paribas in New York. "This is going to be an ongoing issue for the Fed," she added. "We're in uncharted waters." Prices for 10-year debt were down 21/32 after the minutes to yield 1.908 percent from 1.84 percent late on Wednesday and spiked to their highest since May. Prices for 30-year debt traded 1-10/32 lower after the minutes to yield 3.110 percent from 3.04 percent late on Wednesday. Those losses added to a slide earlier in the day after the ADP Employment Report showed private-sector employers added 215,000 jobs in December. Economists surveyed by Reuters had been looking for a gain of 133,000 jobs. "There's an undeniable improving trend in the employment figures showing through in ADP and we've been seeing that in the non-farm private payrolls as well. That's in keeping with the overall picture of stable to improving growth that we saw as 2012 wound down," said Robert Tipp, chief investment strategist at Prudential Fixed Income in Newark, New Jersey. Investors' eyes are now on Friday's non-farm payrolls report. Analysts surveyed by Reuters expect an increase of 150,000. Treasuries had already sold off earlier this week on news the government had reached a last-minute agreement to avert the "fiscal cliff" of tax hikes and spending cuts that threatened to plunge the economy back into recession. President Barack Obama and congressional Republicans face two more months of tough talks, however, on spending cuts and an increase in the nation's debt limit as this week's hard-fought deal covered only taxes and delayed decisions on expenditure until March 1. One big buyer offered a bit of support for Treasury debt prices. The Federal Reserve on Thursday bought about $5.1 billion of Treasuries maturing in 2017 in its first stimulus operation of the year. The central bank's "Operation Twist" stimulus program, under which it sold shorter-dated Treasuries and bought longer-dated debt, expired at year-end. The Fed is now buying about $40 billion per month of mortgage-backed securities and $45 billion per month of longer-dated Treasuries in an effort to prop up the economy. Some analysts have dubbed the Fed purchase programs "QE4." Analysts also said investors may be looking to cheapen Treasuries heading into the sale of $66 billion of government debt next week. The Treasury said on Thursday it will sell $32 billion of three-year notes, $21 billion of reopened 10-year notes and $13 billion of reopened 30-year bonds on Tuesday, Wednesday and Thursday, respectively.