* Prices fall, yield curve holds at steeper levels
* Retail sales Tuesday, inflation data Thursday in focus
* Fed to buy $2.25 bln to $3 bln notes due 2018, 2019
NEW YORK, May 12 (Reuters) - U.S. Treasuries prices fell on Monday before a heavy week of data that includes retail sales and consumer price reports that will be watched for signs of economic strength and whether inflation is rising from levels that are far below the Federal Reserve's targets. Treasuries yields rose last week as the Treasury sold new supply and demand for Thursday's sale of 30-year bonds was weak, with price losses extending through to Monday as dealers sold bonds they absorbed during the auctions. Improving U.S. economic data and subdued demand for long bonds at last week's auction has also helped the yield curve steepen from five-year lows, as the Federal Reserve continues to pare its bond purchases with an eye on interest rate hikes that many see as likely to begin next year. But Dovish comments from European Central Bank President Mario Draghi and still low inflation are putting a curb on yield curve steepening. "For the most part we saw a correction steeper after the refunding, but inflation continues to be tame and that puts a curb to some of the steepening that we're seeing," said Sean Murphy, a Treasuries trader at Societe Generale in New York. The spread between five-year note yields and thirty-year bond yields was around 183 basis points on Monday, after trading at 174 basis points before Thursday's bond auction and at 167 on May 2, the flattest since 2009. Benchmark 10-year notes were last down 4/32 in price to yield 2.64 percent, the highest since May 2, and up from 2.62 percent late on Friday. Thirty-year bonds dropped 8/32 in price to yield 3.48 percent, the highest since April 30 and up from 3.47 percent late on Friday. U.S. retail sales data for April will be released on Tuesday and consumer price index data for April is due on Thursday. On Monday Philadelphia Fed President Charles Plosser will speak on labor and economic trends in older communities and the Treasury will release its monthly budget report. The Fed will also buy on Monday between $2.25 billion and $3 billion in notes due 2018 and 2019 as part of its ongoing purchase program.
(Editing by James Dalgleish)