TREASURIES-Prices gain on weaker stocks, Fed remarks
* Dudley says Fed must push hard against economy's headwinds
* Treasury to sell $97 bln in 2-, 5-, 7-year debt this week
* Fed speakers, key economic data in focus
NEW YORK, Sept 23 (Reuters) - U.S. Treasuries prices edged higher on Monday as stocks declined and after an influential Federal Reserve official said the central bank still needs to push hard against threats to the economic recovery.
Gains were limited before this week's supply of new debt. The Treasury will sell a total of $97 billion in two, five, and seven-year notes.
Benchmark 10-year notes rose 5/32 in price, their yields easing to 2.71 percent from 2.73 percent late on Friday. Thirty-year bonds rose 13/32. Their yields eased to 3.74 percent from 3.76 percent late on Friday.
"We did have a little bit of weakness in the equity market this morning. We've also seen some relatively dovish comments" from Fed officials, said Ian Lyngen, senior bond strategist at CRT Capital Group LLC in Stamford, Connecticut.
Government debt drew a safe-haven bid as stocks on Wall Street came under pressure on worries about the approaching Oct. 1 deadline for Congress to avoid a government shutdown.
Prices also found support after Fed Bank of New York President William Dudley said the central bank must push against economic headwinds "forcefully" and that fiscal uncertainties in particular "loom very large right now".
At a separate New York event, Atlanta Fed President Dennis Lockhart likewise warned that America risked "losing its economic mojo" unless lawmakers worked to reverse declines in labor productivity and new job creation. 1/8ID:nL2N0HJ0R3 3/4
Treasuries prices rose and yields fell last week after the Fed shocked investors with its decision not to trim its large-scale asset purchases, citing strains in the economy from tight fiscal policy and higher mortgage rates. Fewer asset purchases would put downward pressure on bond prices and upward pressure on yields.
The Fed bought $3.7 billion in Treasury coupons on Monday with maturities ranging from June 30, 2019 to July 31, 2020.
Fed Bank of Dallas President Richard Fisher, also on Monday, said he had argued for a $10 billion reduction in the Fed's bond-buying program at the policy meeting last week.
More Fed officials are scheduled to speak this week. Investors will also monitor economic data, including consumer confidence, durable goods and the personal consumption expenditures price index.
In its weekly bill auctions on Monday, the Treasury sold $30 billion in three-month bills at a high rate of 0.020 percent, and $25 billion in six-month bills at a high rate of 0.050 percent.
The Treasury will sell two-year notes on Tuesday, five-year notes on Wednesday, and seven-year notes on Thursday.
If the auction of five-year notes on Wednesday results in a yield in the range of 1.375 percent to 1.499 percent, the notes will be considered an additional issue of the 1-3/8 percent seven-year notes issued on Sept. 30, 2011, the Treasury said. There currently are $29.9 billion outstanding in these notes.
On a separate subject, the New York Federal Reserve on Monday said it accepted $11.81 billion in cash as part of the first test of a new reverse repo tool that is meant to help control short-term interest rates.
Dudley said the Fed's possible new reverse repo facility was not a precursor to a policy chance but could be a new instrument to help manage rates.
When the Fed announced the test on Friday it sparked some selling of short-dated Treasuries, but Monday's move resulted in little market reaction.
Six-month Treasury bill yields rose to 5 basis points on Friday, from 3.5 basis points on Thursday. They stood at 0.043 percent on Monday.
In reverse repurchase agreements, or reverse repos, the Fed temporarily drains cash from the financial system by borrowing funds overnight from banks, large money market mutual funds and others, and offering them Treasury securities as collateral. Banks and the funds receive a modest overnight interest rate, initially set at 0.01 percentage point, or 1 basis point.