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TREASURIES-U.S. yields fall as bond market springs back in March

* U.S. yield curve hits flattest in more than a decade Treasuries poised for gains in March after two months of losses

* Chicago PMI lowest in a year, consumer sector seen steady

* U.S. bond market to close early, to shut on Friday

(Updates market action, adds quote) NEW YORK, March 29 (Reuters) - U.S. Treasury yields fell on Thursday, marking a comeback for the $14.6 trillion sector as investors piled into low-risk government bonds on worries about economic growth and a dramatic pullback in stock prices in March. The U.S. bond market will close early at 2 p.m. (1800 GMT) and shut for the Good Friday holiday. Treasuries have generated a 0.72 percent total return in March for its best month since August, rebounding from losses in January and February. Still, they have produced a 0.11 percent loss in the first three months of 2018, according to an index compiled by Bloomberg and Barclays. "We are seeing some rotation out of equities into fixed income," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York. "Some of this has to do with the pullback in stocks and some of it has to do with what's coming out of Washington." Wall Street has sagged on fears about a global trade war after U.S. President Donald Trump introduced tariffs against China and other nations for perceived unfair trade practices. Stock prices also tumbled on jitters about technology shares in the wake a scandal over political consultants accessing Facebook data on 50 million users. The S&P 500 and Dow are on track for their worst quarter in more than two years. Safe-haven bids for bonds supported demand for $294 billion worth of Treasury bills and notes this week, a record amount, traders and analysts said. "We made it through some significant supply here," Milstein said. At 11:06 (1506 GMT), the yield on 10-year Treasury notes was down 1.8 basis points at 2.757 percent. It hit a seven-week low of 2.743 percent on Wednesday. For the month, the 10-year yield has fallen 11 basis points, its steepest decline since August. However, it has risen 35 basis points for the quarter. The drop in longer-dated yields on Thursday flattened the yield curve to levels not seen in more than a decade. The spread between two-year and 10-year Treasury yields contracted to 46.70 basis points, the tightest level since September 2007, Tradeweb data showed. A flattening curve is a proxy on investors' concerns over slowing economic growth. The Chicago purchasing management index unexpectedly fell to a one-year trough in March On the other hand, the jobs market has remained solid with first-time filings for unemployment benefits hitting over a 45-year low last week. Consumer spending rose a second straight month, while the University of Michigan said consumer confidence ended March at its strongest level in more than 14 years.

March 29 Thursday 11:06AM New York / 1506 GMT Price

US T BONDS JUN8 146-12/32 0-16/32 10YR TNotes JUN8 121-12/256 0-36/256 Price Current Net Yield % Change

(bps)

Three-month bills 1.7 1.7307 -0.005 Six-month bills 1.885 1.9292 -0.008 Two-year note 99-238/256 2.2862 0.000 Three-year note 99-236/256 2.4024 -0.006 Five-year note 99-162/256 2.5788 -0.012 Seven-year note 99-132/256 2.7015 -0.022 10-year note 99-240/256 2.7571 -0.018 30-year bond 100-72/256 2.9856 -0.028

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 29.75 1.75

spread

U.S. 3-year dollar swap 25.50 1.50

spread

U.S. 5-year dollar swap 13.75 1.50

spread

U.S. 10-year dollar swap 3.50 1.25

spread

U.S. 30-year dollar swap -15.25 1.25

spread

(Reporting by Richard Leong Editing by Chizu Nomiyama)