* Treasury to auction $29 billion in seven-year notes
* Market will be closed on Thursday, will close early on Friday
* Jobless claims unexpectedly fell in most recent week
NEW YORK, Nov 27 (Reuters) - Prices for U.S. Treasuries slipped on Wednesday as data suggested further healing in the labor market, with markets preparing for a debt sale later in the day ahead of Thursday's Thanksgiving holiday closure. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week. "We need more data, we always need more data to confirm it seems, but 316K claims to us means the labor market outlook is picking up," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York. The strength of the data mean the Federal Reserve might pull back on its $85 billion per month bond buying program in December, Rupkey noted. "They simply have no grounds for saying the economy won't continue to move higher, pushing the unemployment rate down further just like every other recovery since the 70s." But others cautioned that the data could be clouded by other factors, limiting their predictive value. The Labor Department "noted that the combination of the Veterans Day holiday last week plus the later-than-normal Thanksgiving holiday makes it more difficult to properly seasonally adjust the data," said Michael Gapen, an economist with Barclays in New York. "As a result, we do not read too much into this week's decline and await further releases for more clarity." Markets were also preparing for an auction of $29 billion in seven-year notes later in the session. The auction will come after sales of $35 billion in five-year notes on Tuesday and $32 billion in two-year notes on Monday. The benchmark 10-year Treasury note slipped 11/32 in price to yield 2.734 percent on Wednesday, compared to 2.6960 percent late on Tuesday. The 30-year bond slipped 17/32 in price to yield 3.815 percent on Wednesday, compared to 3.7850 percent late on Tuesday. Investors have spent much of the past few weeks - and likely the rest of the year - trying to gauge when the Fed might slow or stop its so-called quantitative easing program. Better-than-expected data, such as Wednesday's jobless claims, could help policymakers pare back on purchases of Treasuries and mortgage-backed securities. Nevertheless, separate data on Wednesday showed what seemed to be waning momentum in factory activity. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 1.2 percent in October. The mixed data underscore the challenge facing the Fed, where policymakers are trying to balance the need to support the economy with worries that too much intervention could lead to distortions or other unintended consequences. The Fed has repeatedly said that data on the health of the economy will be the major deciding factor in any tapering of purchases. Key data will come on Friday, Dec. 6, with the release of nonfarm payrolls for November. The Fed wants to see the unemployment rate closer to 6.5 percent from its current 7.3 percent. Economists in a Reuters survey see that rate edging down to 7.2 percent in November.