TREASURIES-U.S. bond market rallies on stock losses, quarter-end buying

* U.S. to sell $29 bln 7-year notes, $15 bln 2-year FRNs Wednesday

* Investors digest 85 pct of this week's record supply

* U.S. consumer confidence unexpectedly falls in March

* Investors most upbeat on Treasuries since June -JPMorgan

(Updates market action, adds quote) NEW YORK, March 27 (Reuters) - U.S. Treasury yields fell on Tuesday with 10-year yield hitting six-week lows as fund managers purchased bonds to rebalance their portfolios for quarter-end, offsetting sales to make room for the record high $294 billion in government debt this week. A sharp negative turn on Wall Street, which wiped out its earlier gains, kindled safe-haven demand for bonds. The U.S. Treasury Department sold $65 billion in one-month bills; $24 billion in one-year T-bills and $35 billion in five-year notes to average demand. The auctions on Monday and Tuesday were equivalent to 85 percent of the scheduled Treasuries supply this week. "There is the cash out there for these issues," said John Canavan, market strategist at Stone & McCarthy Research Associates in New York. Canavan said he expected solid bidding for $29 billion of seven-year notes and $15 billion in two-year floating-rate notes on Wednesday. Lingering worries about a trade war between the United States and China have supported safe-haven demand for Treasuries, though Wall Street stock prices initially rose for a second day on Tuesday following last week's plunge tied to fears about an escalation of trade barriers between the world's two biggest economies. "Despite todays stock market rebound, 'flight-to-quality' sentiment may still linger given market concerns over trade policies, which could be supportive for demand," analysts at Nomura Securities International wrote in a research note. The share of investors who are bullish on longer-dated Treasuries rose to its highest level since last June, a survey from JPMorgan released on Tuesday showed. The $14.7 trillion Treasury sector was on track to generate about a 0.4 percent total return in March, bouncing back from two straight months of losses, according to an index compiled by Barclays and Bloomberg. Moreover, the Conference Board said its gauge of U.S. consumer confidence unexpectedly fell to 127.7 in March from a revised 130.0 in February. This raised some worries about consumer spending in the first quarter, analysts said.

The yield on 10-year Treasury notes was down 5.9 basis points to 2.783 percent after touching its lowest level since Feb. 9. Two-year yields were down 4.2 basis points to 2.274 percent, while the yield on 30-year Treasury bonds touched a near seven-week low and was last down 4.3 basis points to 3.028 percent. On Wall Street, the three major stock indexes turned negative in afternoon trading, dragged down by technology shares. The U.S. bond market will close early at 2 p.m. (1800 GMT) on Thursday and shut for the Good Friday holiday. March 27 Tuesday 3:09PM New York / 1909 GMT Price

US T BONDS JUN8 145-23/32 1 10YR TNotes JUN8 120-248/256 0-128/256 Price Current Net Yield % Change


Three-month bills 1.7425 1.7746 -0.020 Six-month bills 1.8875 1.9322 -0.013 Two-year note 99-246/256 2.2701 -0.046 Three-year note 99-246/256 2.3886 -0.049 Five-year note 100-58/256 2.5755 -0.057 Seven-year note 100-76/256 2.7025 -0.066 10-year note 99-192/256 2.7789 -0.062 30-year bond 99-128/256 3.0254 -0.046


Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 27.75 -6.50


U.S. 3-year dollar swap 25.00 -1.75


U.S. 5-year dollar swap 13.25 -1.50


U.S. 10-year dollar swap 2.00 -1.25


U.S. 30-year dollar swap -16.75 -1.50


(Reporting by Richard Leong; Editing by Dan Grebler and Chizu Nomiyama)