TREASURIES-Prices gain after 7-year debt sale
* Fed speakers, weak data help stabilize markets
* $29 bln of 7-year notes sold at highest yield since July 2011
* Fed buys $5.05 billion in notes due 2017, 2018
NEW YORK, June 27 (Reuters) - U.S. Treasuries prices gained on Thursday, and a sale of seven-year debt drew more aggressive bidding than markets had expected, in a sign that the bond market is stabilizing after a sharp selloff. The sale of $29 billion of seven-year notes drew a high yield of 1.932 percent, the highest since July 2011, but still less than the market had expected. Indirect bidders bought their biggest share since August 2011. The auction "brought a renewed trading spark that punched through levels not touched since noon last Friday," said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee. Treasuries slumped last week after the Federal Reserve chairman, Ben Bernanke, said the U.S. central bank could begin to pull back on its $85-billion-per-month bond-buying program as soon as the economy improves. Prices have largely firmed this week after the selloff drove yields to their highest in 22 months, and as investors revised their expectations that the Fed could be nearing a reduction in its bond purchases. The government's final estimate on first-quarter gross domestic product came in weaker than economists had expected. In addition, some Fed officials tried to calm markets this week over the fears on curbing stimulus. "The Fed has made efforts to talk the market back from those assumptions" that the Fed is likely to start paring its bond purchases in September, said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut. On Thursday, both the president of the New York Fed, William Dudley, and Fed Governor Jerome Powell sought to dissuade investors that monetary accommodation was fading any time soon, even saying that markets have misinterpreted the U.S. central bank's intentions. As part of its ongoing stimulus, the Fed bought $5.05 billion in notes due 2017 and 2018 on Thursday. Benchmark 10-year note yields have backed away from the 22-month high of 2.67 percent reached on Monday. The 10-year notes traded up 18/32 in price to yield 2.476 percent on Thursday. Even so, the yields remain significantly higher than the 2.20 percent area they traded at before Bernanke's comments, and above 1.60 percent at the beginning of May. "We've found a new range. We think we'll stay in this range, in the mid-2.40s to mid-2.60s, for the next week and then payrolls will be a determining factor," said Ira Jersey, an interest rate strategist at Credit Suisse in New York. The government's payrolls report for the month of June, due next Friday, comes one day after the U.S. Independence Day holiday, which may reduce volumes and make trading on the number more volatile.