TREASURIES-Bonds up, looming U.S. budget cuts feed safety bid

* Month-end buying cited as money managers adjust portfolios

* Fed's commitment to bond purchases supportive

* GDP bullish for bonds, jobless claims data bearish

NEW YORK, Feb 28 (Reuters) - U.S. Treasuries rose on Thursday as investors bought safe-haven U.S. debt on the eve of federal budget cuts with the potential to damp growth. The automatic spending cuts, known as sequestration, were due to take effect on Friday. Month-end buying as money managers adjusted their average portfolio duration to meet benchmarks was also supportive. So was reassurance from Federal Reserve Chairman Ben Bernanke this week that the U.S. central bank believed in the usefulness of its unconventional monetary easing strategies and that its bond purchases would continue. "The budget negotiation related to the sequestration adds a great deal of uncertainty and that has led to a re-emergence of a flight to quality," said Dan Heckman, senior fixed income strategist at Minneapolis-based U.S. Bank Wealth Management. The International Monetary Fund warned on Thursday it would likely cut its growth forecasts for the United States and the global economy if the spending cuts take effect. IMF spokesman William Murray said the IMF would likely shave the 2013 U.S. growth forecast by at least 0.5 percentage point if the cuts are fully implemented. The IMF now projects the U.S. economy will grow 2 percent this year. U.S. ECONOMIC DATA Two reports, one on the U.S. economy's growth in the fourth quarter and the other on the new jobless claims count for the week ended Saturday, taken together, were neutral for bonds. The government said U.S. gross domestic product grew 0.1 percent in the fourth quarter of 2012. That was less than the very modest 0.5 percent growth the market had expected. New claims for unemployment insurance, however, totaled 344,000, fewer than the 360,000 claims economists had forecast. "There was very little reaction in the bond market to this morning's data," said Tom DiGaloma, managing director at Navigate Advisors in Stamford, Connecticut. "Jobless claims dropped significantly, but the revisions to GDP showed growth in the fourth quarter was still quite weak." SEQUESTER AHEAD President Barack Obama and Republican congressional leaders have yet to reach a deal to avert the $85 billion worth of spending cuts, which economists say will hurt the economy. Strategists say the cuts, or protracted negotiations over them, supported demand for low-risk government debt. "The risks are to the downside in part from the potential, additional fiscal drag from the sequestration," said Michael Pond, head of global inflation-linked research at Barclays Capital. "Even if they come up with an alternative, the alternative would not be no cuts, but maybe different cuts. That still means growth will not be as strong as it would have been without the cuts." The benchmark 10-year Treasury note was up 4/32, its yield easing to 1.89 percent from 1.90 percent late on Wednesday. Thirty-year Treasury bonds rose 9/32 in price, their yields easing to 3.09 percent from 3.10 percent late on Wednesday. The revived bid for safe-haven U.S. debt emerged after interest rates rose for much of February on the view that "some of the factors that had been giving the market jitters seemed under control," said Mike Materasso, senior vice president and co-chair of Franklin Templeton's fixed income policy committee. "Then the Italian elections early this week reminded us that we were still in a volatile environment and that triggered some profit-taking. Trades that had done well for several weeks saw some unwinding," he said.