TREASURIES-Yields hit lowest in 1-1/2 weeks on Cyprus bank scare
* Benchmark yields dip to as low as 1.90 percent
* Cyprus bailout plan raises fears over euro zone contagion
* Investors focused on Fed meeting announcement on Wednesday
NEW YORK, March 18 (Reuters) - Prices for U.S. Treasuries jumped in heavy trading on Monday, taking benchmark yields to their lowest in almost two weeks as a euro zone plan to seize money from Cypriot bank deposits rattled investors around the world. Euro zone finance ministers want to tap Cyprus' savers for the country to receive a 10 billion euro ($13 billion) bailout, which triggered a run on bank deposits after its announcement on Saturday morning. Cypriot ministers scrambled to revise the plan on Monday to try to increase the chance of passage by lawmakers, postponing a parliamentary vote until Tuesday and prolonging the uncertainty for investors. "Although euro zone leaders will argue that Cyprus is different and a one-off case, with the latest Cypriot bailout package European leaders have opened a can of worms in that future bailouts may now affect bank depositors," said David Keeble, global head of interest rate strategy at Credit Agricole in New York. Benchmark 10-year Treasuries last traded up 10/32 in price to yield 1.956 percent, after earlier falling to as low as 1.90 percent. The notes ended on Friday yielding 1.99 percent. Monday's yield was the lowest since March 6. Thirty-year bonds gained 15/32 in price to yield 3.187 percent, with yields falling as low as 3.12 percent overnight. Bond yields ended Friday at 3.21 percent. Demand for safe haven bonds, including Treasuries, was seen as exacerbated by hedge funds and other leveraged investors looking to cover exposures to risky European assets including sovereign debt such as that of Italy and Spain, which weakened on the Cyprus news. Investors were also focused over whether the move will make it more likely that policymakers will consider forcing losses on other investors including bank bondholders, which has formerly been considered taboo. "The idea that there has to be private pain in order for there to be any public bailout seems to be a bit of a regression to where we were three years ago," said Jim Vogel, interest rate strategist at FTN Financial in Memphis, Tennessee. Some analysts, however, saw most of the Treasuries rally as being exhausted by mid-morning, unless there are signs of contagion from Cyprus into the euro zone. Instead, said MacNeil Curry, a technical strategist with Bank of America Merrill Lynch in New York, investors should stay bearish. "Absent a break of 1.871 percent/1.826 percent the uptrend remains on firm footing for 2.149 percent" or even further, Curry said. Investors are also looking to a Federal Reserve meeting on Tuesday and Wednesday, watchful for any signs Fed Chairman Ben Bernanke may consider tapering or ending bond purchases after recent data have pointed to an improving U.S. economy. "The question becomes how firmly Bernanke restates all of his earlier positions, given the markets view that the economic data continue to get better," said Vogel. Most Wall Street economists expect that the Fed will continue its bond purchases through 2013, before tapering or ending the buybacks in 2014. The Fed bought $1.46 billion in bonds due 2036 to 2043 on Monday as part of its ongoing Treasuries purchase program.