* Crimea referendum eases safety bid for Treasuries
* Fed seen likely to reduce bond purchases, alter guidance
* Yields hold in recent range as economic data mixed
NEW YORK, March 17 (Reuters) - U.S. Treasuries fell in price on Monday after Sunday's referendum in Crimea passed without major violence, reducing safety demand for U.S. government bonds, and before the Federal Reserve's highly anticipated meeting on Tuesday and Wednesday. Crimea formally applied to join Russia on Monday after its leaders declared a Soviet-style 97-percent result in favor of seceding from Ukraine in a referendum condemned as illegal by Kiev and the West that will trigger immediate sanctions.
Without new headlines from the region investors are now focusing on this week's Fed policy meeting, at which the central bank is expected to continue to reduce the size of its bond purchase program but alter its forward guidance. "They are going to move away from thresholds on specific economic indicators and take a more wholistic approach that depends on subjective evaluation of a broad array of economic indicators. They are trying to move back to a more normal approach to policy," said Ward McCarthy, chief financial economist at Jefferies in New York. Benchmark 10-year notes fell 8/32 in price on Monday to yield 2.67 percent, in the middle of a two-month long range that has kept yields between 2.57 percent and 2.82 percent. The Fed previously said that it would not raise interest rates until joblessness fell to at least 6.5 percent, a pledge that policymakers thought would hold until at least mid-2015. But that rate hit a five-year low of 6.6 percent in January, before rising to 6.7 percent in February. The Fed is seeking to hold short-term rates at record lows as it gradually unwinds its monetary stimulus, and it is expected to cut the size of its monthly bond purchases by an additional $10 billion this week. Rates are seen as likely to continue stay relatively low in the near-term, however, as economic data still shows mixed growth prospects, and after a recent bout of weakening data that is seen at least partly due to bad weather. Prices fell slightly after data showing U.S. manufacturing output rebounded more than expected in February and recorded its largest increase in six months, in the latest sign that economic activity is gaining momentum after being dampened by severe weather. "It's going to be an increasing challenge for the Fed to keep short-term rates low, and I think they will succeed during this period when we continue to see mushy economic data. But beyond that, once we start seeing more solid growth, then we will start seeing more volatility at the front-end of the curve," said McCarthy. The Fed will buy between $2.25 billion and $2.74 billion in notes due 2021 to 2024 on Monday as part of its ongoing purchases. A New York Federal Reserve gauge of manufacturing in New York state also rose in March though at a slower rate than forecast, as new orders and inventories jumped.