TREASURIES-Prices ease on unexpected fall in U.S. jobless claims

* U.S. weekly jobless claims unexpectedly fall to 5-year low

* Yields start the day down on worries over U.S. spending cuts

* Benchmark yields touch the lowest in over 3 weeks

NEW YORK, Jan 24 (Reuters) - U.S. Treasury debt prices eased on Thursday, paring early gains after data showing new claims for unemployment benefits fell unexpectedly to a five-year low in the latest week. The fall in jobless claims supported hopes of a recovery in the labor market and undermined the safe-haven investment appeal of U.S. government debt. Strength in some stocks also undermined Treasuries prices, as the S&P 500 rose above 1,500 for the first time since late 2007. The jobless claims data "imply that we may get a good employment number for the month of January when it is released in early February," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York. Treasuries began the day trading higher in price as investors sought safe havens due to concerns about the impact of potential U.S. spending cuts and weak French data. A Republican plan to extend the U.S. Treasury's borrowing authority will allow it to borrow money through mid-May, temporarily easing default concerns. But after the plan's approval on Wednesday in the House of Representatives, speaker John Boehner said Republicans would take the next opportunity -- automatic spending cuts set for March 1 -- to demand reforms from President Barack Obama. Benchmark 10 year Treasury notes were trading 11/32 lower in price to yield 1.87 percent, up from 1.82 percent late Wednesday. Ahead of the release of the jobless claims data, yields dipped to 1.81 percent, marking the lowest in over three weeks. U.S. yields fell early in the session in tandem with those of triple-A rated German Bunds after data showed French business activity shrank in January to the lowest level since March 2009.

The Federal Reserve bought $3.36 billion of U.S. government debt maturing February 2020 through November 2022 as part of its latest economic stimulus program. The Treasury early on Thursday afternoon will auction $15 billion of 10-year Treasury inflation-protected securities. The Labor Department said on Thursday that initial claims for state unemployment benefits fell 5,000 in the latest week to a seasonally-adjusted 330,000, the lowest level since January 2008. Analysts polled by Reuters had expected claims to rise to 355,000 last week.

Some analysts cautioned, however, that it may be early to declare the labor market was experiencing anything more than a very tepid recovery. "It is welcome to see jobless claims on a downward trend, but we need a few more weeks to confirm the size of the decline reflects more than a seasonal swing and the trend is sustainable," said Mei Li, economic analyst at FTN Financial in New York. Thirty-year Treasury bonds were trading 25/32 lower in price to yield 3.06 percent, up from 3.01 percent late Wednesday.