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TREASURIES-Longer-dated prices rise on muted inflation view

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(Updates market action, adds details on PPI data)

NEW YORK, Oct 12 (Reuters) - Longer-dated U.S. Treasuriesprices rose on Friday after U.S. producer price data signaledthe underlying domestic inflation trend remained muted due tosluggish demand, making long-dated debt attractive to investors.

The government's producer price index rose 1.1 percent inSeptember, largely due to a 9.8 percent jump in gasoline prices.However, bond traders focused on the index's core, whichexcluded volatile energy and food prices, and was unchanged onthe month.

Benchmark 10-year Treasury notes

rose 2/32 inprice, yielding 1.659 percent, 1 basis point lower thanThursday's close.

The 30-year bond

was up 11/32 in price,rebounding from an earlier 18/32 decline in overseas trading.The 30-year yield was last 2.830 percent, compared withThursday's close at 2.848 percent.

(Reporting by Richard Leong; Editing by Leslie Adler)

((richard.leong@thomsonreuters.com)(+1 646 303 6313)(ReutersMessaging: richard.leong.thomsonreuters.com@thomsonreuters.net))

((-------MARKET SNAPSHOT AT 9:01 a.m. EDT (1301 GMT)-------Dec T-Bond149-20/32 (+12/32)Dec 10-Year note133-11/32 (+03/32)Change vs CurrentNyk yieldThree-month bills0.1 (+0.00) 0.102Six-month bills0.1475 (+0.00) 0.150Two-year note99-31/32 (+) 0.266Five-year note99-27/32 (+) 0.65910-year note99-22/32 (+03/32) 1.66030-year bond98-13/32 (+12/32) 2.829DOLLAR SWAP SPREADSLAST ChangeU.S. 2-year dollar swap spread 10.75 (-1.25)U.S. 3-year dollar swap spread 10.50 (-0.50)U.S. 5-year dollar swap spread 12.50 (-0.25)U.S. 10-year dollar swap spread 4.50 (+0.25)

U.S. 30-year dollar swap spread -23.25 (+0.25)))

Keywords: MARKETS USA BONDS/