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TREASURIES-Prices gain as soft data raises U.S. outlook worries

* Long yields fall to day's lows after U.S. data, bond auction

* Treasury sells $16 billion in U.S. 30-year bonds

NEW YORK, Feb 13 (Reuters) - U.S. Treasury debt prices advanced on Thursday after two days of losses as weaker-than expected economic data rekindled the view that the Federal Reserve could pause in reducing its asset purchases.

Yields on U.S. 10-year notes and 30-year bonds fell to session lows after U.S. jobless claims and retail sales data came in weaker than market expectations.

U.S. retail sales fell unexpectedly in January by 0.4 percent, and another gauge of consumer spending also slipped. U.S. initial jobless claim, meanwhile, rose to a seasonally adjusted 339,000.

"Economists and corporations are grappling with the question: are we going to see a bounce-back once weather conditions improve across the country?" said Heather Loomis, West Coast director of fixed income at JP Morgan Private Bank in San Francisco.

"Or, are we beginning to see signs of something more systemic? And there's a lot of uncertainty around that."

Yields had rallied the last two days after the U.S. Congress approved an increase in the debt limit and new Federal Reserve Chair Janet Yellen vowed to keep the Fed's tapering program despite weakness in recent economic data.

Overall, many market participants still believe the improvement in the U.S. economic outlook is sufficient to keep the Fed on track to scale back its stimulus. Analysts said, once this cold spell is over, consumer demand would recover and the U.S. economy would regain its footing.

"I do think we will bounce back," said JP Morgan's Loomis. "If you look at the fundamentals right now, there's strength in a number of channels. We do not believe that we are on the edge of a major slowdown in growth."

In late trading, benchmark 10-year Treasuries were up 8/32 in price to yield 2.73 percent. Ten-year yields earlier hit a session low of 2.72 percent following the U.S. 30-year bond auction.

Thirty-year bonds, meanwhile, rose 21/32 in price to yield 3.68 percent. On Wednesday, 30-year yields touched three-week peaks of 3.73 percent.

Five-year notes climbed 9/32 in price to yield 1.50 percent, while seven-year notes advanced 14/32 with a yield of 2.14 percent.

Meanwhile, the U.S. Treasury sold 30-year bonds with strong overall results. The high yield was 3.69 percent, compared with 3.70 percent at the bid deadline..

Bids totaled just $36.4 bln for a soft 2.27 bid-to-cover ratio, well below last month's 2.57 and the 2.43 average, but indirect bidders, which include foreign central banks, were awarded 45.3 percent of the supply, in line with January's 44.4 percent and above the 39.5 percent average.

"This was a fairly strong auction," said Thomas Simons, money market economist at Jefferies & Co in New York. "We suspect that there is a lot of cash out there that needs to be put to work and cannot simply stay on the sidelines forever."

Overall, Treasury volumes were light on Thursday, with cash trading at 84 percent of the 10-day moving-average, according to CRT Capital. U.S. five-year notes were the most actively traded, taking a 32 percent market share, with trading in 10-year notes second at 29 percent.