TREASURIES-Bonds stable after supply, budget talks in focus
* Treasuries stable after absorbing $72 bln new supply
* Budget talks expected to be focus, may send yields lower
NEW YORK, Feb 15 (Reuters) - U.S. Treasuries were stable on Friday with yields holding under key support levels at 10-month highs after investors absorbed new supply this week, with talks in Washington over the budget expected to dominate trading in the coming weeks. Benchmark 10-year notes have tested support at yields of around 2.03 percent to 2.06 percent over the past few days but failed to break higher, which could have set the notes up for further weakness. Treasuries may now get a bid in the coming weeks as negotiations over automatic budget cuts, scheduled to come into effect on March 1, come under increasing focus. The cuts, if implemented, are expected to reduce economic growth, which could send rates back lower. "The sequester is the big budget thing going forward," said Alan De Rose, head trader of government trading and finance at Oppenheimer & Co in New York. "I think the combination of the Fed buying and some of the headwinds that are going to come from some level of budget cuts is not going to let rates go up too much," he added. Ten-year Treasuries were last yielding 2 percent, at the high end of a recent trading range from around 1.90 percent to 2.03 to 2.04 percent. Some pressure on Treasuries yields is also likely to abate after the Treasury this week completed its sale of $72 billion in new three-year, 10-year and 30-year debt. Investors also were focused on a meeting in Moscow of financial officials from the Group of 20 nations on Friday, that is set to be dominated by the debate over exchange rates. . At issue is whether the loose monetary and fiscal policies of the United States, Japan, Britain and the euro zone amount to strategies of "competitive devaluation" or currency manipulations intended to boost exports and growth.