TREASURIES-Bond prices fall on reduced fears over Syria strike
* U.S. factory data to follow encouraging signs in China, Europe
* Worries over strike against Syria ease, pare safe-haven bids
* Fed to buy $4.25 billion to $5.25 billion in medium-term Treasuries
NEW YORK, Sept 3 (Reuters) - U.S. government debt prices fell on Tuesday, as traders pared their safe-haven stakes in bonds after U.S. President Barack Obama said he would ask for congressional backing for a military strike against Syria.
Financial markets were jittery last week over a possible spreading of conflict in the Middle East, which would disrupt oil exports and hurt the global economy.
Traders had braced for a U.S.-led strike against Syria this weekend following chemical weapons attacks that U.S. officials say killed 1,429 civilians. It is unclear whether U.S. lawmakers will support Obama's call for such a strike.
Benchmark 10-year Treasuries last traded 14/32 lower in price for a yield of 2.843 percent, up 5.4 basis points from late on Friday.
The 30-year bond lost 1 point with a yield of 3.774 percent, up 5.8 basis points from Friday's close.
U.S. financial markets were closed on Monday for the Labor Day holiday.
As an imminent U.S.-led strike against Syria was on hold for now, traders will focus on this week's spate of economic data and determine whether they are strong enough for the Federal Reserve to shrink its $85 billion monthly bond purchases, known as QE3, at its Sept 17-18 policy meeting.
Some analysts expect the central bank to dial back its third round of bond-purchase stimulus as the economy seems to be expanding a decent clip and unemployment is trending lower although at a slower pace than policy-makers would like at this point of the recovery.
Other analysts argue the economy remains too wobbly without the support of the Fed's current pace of Treasuries and mortgage-backed securities purchases. They say domestic economic growth is vulnerable as the recent surge in mortgage rates to two-year highs has set back the housing recovery.
Recent weakness in orders for airplanes and big-ticket items also raised worries about manufacturers hitting a rough patch and speculation the Fed would refrain from deciding on reducing QE3 in two weeks.
The Institute for Supply Management will release its August reading on its index on U.S. manufacturing activity at 10 a.m. (1400 GMT). Economists polled by Reuters projected this manufacturing gauge likely slipped to 54.0 from 55.4 in July.
Slower U.S. factory growth will likely be mitigated by data suggesting evidence of renewed growth in Europe and resilience in the Chinese services sector.
In the meantime, the Fed was scheduled to buy $4.25 billion to $5.25 billion of Treasuries due in Sept. 2017 to May 2018 at 11 a.m. (1500 GMT), which will be part of its planned $45 billion in QE3 government debt purchases in September.