* Focus on testimony of Fed's Yellen
* News on Trump Jr's e-mails briefly pushes U.S. yields lower
* U.S. to auction 3-year notes.
(Adds fresh comment, political news; updates prices) NEW YORK, July 11 (Reuters) - U.S. Treasury yields were flat to slightly higher on Tuesday in choppy trade, tracking modest gains in Europe, as investors focused on upcoming congressional testimony from Federal Reserve Chair Janet Yellen that could shed more light on the pace of U.S. interest rate hikes. Long-dated yields briefly turned lower after President Donald Trump's eldest son released an email chain, which referred to a top Russian government prosecutor as offering the Trump campaign damaging information about Democratic rival Hillary Clinton. "This suggests that allegations the Trump campaign colluded with Russia are not yet settled," said Gennadiy Goldberg, interest rates strategist at TD Securities in New York. "At the margin, this draws attention away from President Trump's economic agenda." The market's focus, however, remained on Yellen. The Fed chair will deliver her semi-annual monetary policy testimony before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday. Investors will also be looking to Yellen for clues on when the Fed will start unwinding its massive balance sheet. San Francisco Federal Reserve Bank President John Williams said in Sydney earlier on Tuesday that he still expected one more increase in interest rates from the Fed this year and for the U.S. central bank to start unwinding its massive balance sheet in the next few months. Yields, which move inversely to prices, dipped on Monday in what analysts said was a retracement of previous gains that were fueled by last week's robust U.S. non-farm payrolls report for June and recent comments by Fed officials on upcoming rate hikes. "The Treasury market is in a holding pattern as we approach the more meaningful events on the immediate horizon," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York. U.S. Treasuries were also trading in tandem with European bonds, with the region's yields drifting slightly higher.
In midday trading, the benchmark 10-year Treasury note
yielded 2.373 percent , up slightly from 2.371
percent late on Monday.
U.S. 30-year yields were at 2.925 percent,
compared with Monday's 2.923 percent. Later on Tuesday, the U.S. Treasury will auction $24 billion in three-year notes. Nomura Securities was optimistic about demand for U.S. three-year notes, noting that investors may still want to own some front-end paper "given the languishing wage growth could dampen some optimism in the Fed's outlook."
(Reporting by Gertrude Chavez-Dreyfuss; editing by Steve Orlofsky, G Crosse)