TREASURIES-Yields tick up on strong private payrolls, ahead of Fed

NEW YORK, Jan 30 (Reuters) - U.S. government bond yields rose on Wednesday morning after data showed private sector jobs increased more than expected in January, and ahead of the Federal Reserve's policy statement that is expected to leave interest rates unchanged.

The Federal Open Markets Committee was set to conclude a two-day policy meeting on Wednesday afternoon, a month after raising rates for the fourth time in 2018. Since the December hike, financial markets have been roiled by volatility, China and Europe have acknowledged slowing growth and U.S. consumer confidence has dropped along with home sales.

Investors are therefore expecting Fed Chairman Jerome Powell, who is giving a news conference after the policy statement at 2 p.m. EST (1900 GMT), to reiterate the bank's willingness to pause its hiking scheme if necessary.

"The market can expect the statement to acknowledge the new theme of patience, which should mean that the gradual rate hiking forward guidance of previous statements is tempered down," said Mohammed Kazmi, portfolio manager at Union Bancaire Privee.

While Treasury yields rise with interest rates, traders are exiting their positions to reduce market exposure ahead of the FOMC statement. That lowers prices and lifts yields.

Also driving up Treasury yields was the ADP National Employment Report that showed that the United States added 213,000 private sector jobs in January, more than expected.

The ADP data comes ahead of the more comprehensive non-farm payrolls report published Friday. The correlation between the two reports is erratic, so the former is not typically an effective predictor of the latter. The forthcoming non-farm payrolls report is expected to reflect an uptick in the unemployment rate due to the five-week federal shutdown which ended on Jan. 25.

Also on Wednesday, the Treasury Department announced an $84 billion refunding package, which is $1 billion larger than last quarter. As expected, the only auctions to increase in size will be those for Treasury Inflation-Protected Securities.

Also in focus is the renewed attempt by Washington and Beijing to dig out from a damaging trade war. Cabinet-level officials, led by Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer, began two days of talks on Wednesday in Washington.

The benchmark 10-year government note yield was last up nearly a basis point at 2.72 percent. The two-year yield , which reflects market expectations of interest rate increases, was up 0.8 basis point at 2.58 percent. The 30-year yield was up less than half a basis point at 3.04 percent. (Reporting by Kate Duguid Editing by Frances Kerry)