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TREASURIES-U.S. bond yields fall ahead of 3-year supply

* U.S. to sell $27 billion in new three-year notes

* Weaker German data, stock prices stoke bids for bonds

* Fed's Lacker, Kocherlakota to speak on U.S. economy

* Fed to buy $1.00-$1.25 bln debt due 2036-2044

NEW YORK, July 8 (Reuters) - U.S. Treasuries yields fell on Tuesday in advance of a $27 billion auction of three-year notes as investors raised their bond holdings due to weaker stock prices and German trade data.

U.S. government debt yields declined for a second day on the notion last week's report showing hefty job gains in June was not strong enough to spur the Federal Reserve to raise short-term interest rates before the second half of 2015, analysts and traders said.

"They are pricing out an aggressive Fed," said Michael Franzese, senior vice president of fixed income trading at ED&F Man Capital in New York.

Franzese and other traders will receive clues on the central bank's latest views when Richmond Fed President Jeffrey Lacker speaks at 1 p.m. (1700 GMT) and Minneapolis Fed chief Narayana Kocherlakota will give a talk at 1:45 p.m. (1745 GMT).

Longer-dated yields have fallen more than 10 basis points from the two-month peaks set on Thursday during an initial bond market sell-off in reaction to the June payrolls data.

The benchmark 10-year Treasuries yield last traded at 2.568 percent, down 5 basis points from Monday, while the yield on 30-year bonds fell nearly 5 basis points to 3.393 percent.

On Wall Street, major stock indexes fell on caution going into start of the corporate earning season.

Foreign demand for higher-yielding Treasuries also stoked the fall in U.S. yields as disappointing European economic data fed expectations the European Central Bank would engage in quantitative easing and lower rates further to stimulate the region's economy.

"The bond market is taking its cue (partly) from Europe," said Jeffrey Kleintop, chief market strategist with LPL Financial at a presentation with reporters here, adding the recent disappointing data on Europe will likely help keep a lid on a significant rise in U.S. yields.

The German government said earlier euro zone's biggest economy posted larger-than-forecast drops in exports and imports in May, spurring worries its economy is losing steam.

The 10-year Bund yield fell 3 basis points to 1.225 percent, which was 1.346 percentage points lower than its U.S. counterpart. The 10-year yield spread between Treasuries and Bunds hovered at its widest level since 1999.

In the meantime, the rally in the bond market came in advance of the first part of this week's $61 billion in fixed-rate Treasuries supply set at 1 p.m. (1700 GMT).

The latest three-year supply was on track to sell at its highest yield in more than three years. In the "when issued" market, traders expected the issue due July 2017 fetch a yield of 0.996 percent.

Separately, the Fed was scheduled to buy $1.00 billion to $1.25 billion in debt due in 2036 to 2044, part of its planned $19 billion purchases of Treasuries in July.

(Reporting by Richard Leong; Editing by Meredith Mazzilli)