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TREASURIES-Yields fall as Trump signals possible government shutdown

* Trump comments on government shutdown prompt safety buying

* Yields on T-bills due in early October rise

* Central bankers' Jackson Hole meeting in focus

NEW YORK, Aug 23 (Reuters) - U.S. Treasury yields fell on Wednesday as stocks weakened after U.S. President Donald Trump said late on Tuesday that he would be willing to risk a government shutdown to secure funding for a border wall, raising fears of a bruising budget battle. The comments came as lawmakers face a deadline in late September to raise the U.S. debt ceiling or risk defaulting on debt payments. To the extent that equities are reacting to last nights speech you can say thats bleeding now into fixed-income, said Jim Vogel, an interest rate strategist at FTN Financial in Memphis.

Benchmark 10-year notes were last up 9/32 in

price to yield 2.19 percent, down from 2.22 percent on Tuesday. Yields on Treasury bills that are due near when the government is expected to run out of money also jumped. Yields

on bills due Oct. 5 rose as high as 1.14 percent,

the highest level since August 11. Treasury yields had risen earlier on Wednesday after private sector surveys in Germany and France both showed strong growth in August, boosting confidence in improving economic conditions in the eurozone. Investors are next focused on this weeks annual central banking conference in Jackson Hole, Wyoming, which begins on Thursday, where Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are both due to speak. Many analysts and investors have low expectations, however, that much new information will be forthcoming from Yellen, with attention more focused on whether Draghi will give any indications the ECB is closer to paring bond purchases. Two sources have told Reuters that Draghi will not deliver any new policy message at the event. Draghi on Wednesday heralded unconventional monetary policy as a success but cautioned that central banks need to carefully weigh their policy steps as gaps in understanding the relatively new tools remain. Yields have held in a tight range since falling to almost two-month lows on Friday on concerns about political discord in Washington and tensions between the U.S. and North Korea. North Korean leader Kim Jong Un has ordered more solid-fuel rocket engines, state media reported on Wednesday, as he pursues nuclear and missile programs amid a standoff with Washington, but there were signs of tension easing.

(Editing by Nick Zieminski)

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