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TREASURIES-U.S. yields slip on trade worries before 3-year supply

the end of the week, and would "soon" target remaining

* U.S. to sell $38 bln 3-year notes at 1 p.m.

* U.S.-China trade jitters stoke safe-haven demand for bonds

* Investors most neutral on Treasuries in five weeks - JPMorgan

(Updates market action, adds graphic) NEW YORK, May 7 (Reuters) - U.S. Treasury yields fell on Tuesday for a second day with 10-year yields slipping below 2.50%, prompted by worries about renewed trade tension between China and the United States and its impact on global economic growth. Safe-haven demand for U.S. government debt bodes well for this week's $84 billion May refunding, which kicks off with a three-year note sale at 1 p.m. (1700 GMT). "The inaugural coupon supply for Mays refunding week will be today's $38 (bln) 3-year auction, and given the latest trade war salvo there is surely at least a modest bullish backdrop to todays supply," BMO Capital Markets analysts wrote in a research note. On Sunday, U.S. President Donald Trump threatened to raise tariffs on $200 billion worth of Chinese goods to 25% from 10% Chinese imports with tariffs. The surprise decision cast doubts over the world's two biggest economies reaching a trade agreement any time soon, spurring investors to sell stocks and other risky assets and to flock into bonds. Wall Street's major indexes tumbled more than 1%, adding to Monday's losses. Traders are pinning hopes that a deal is still within reach after Beijing said earlier on Tuesday that Chinese Vice Premier Liu will visit the United States this week for trade talks.

At 11:22 a.m. (1522 GMT), the yield on benchmark 10-year Treasury notes was down 4 basis points at 2.4602%. Thirty-year yields were 3.4 basis points lower at 2.8736%. Investors turned the most neutral on longer-dated Treasuries this week after an overall upbeat payrolls report in April on Friday and the Federal Reserve's signal that it sees no reason to raise or cut interest rates right now, according to a J.P. Morgan survey released on Tuesday. In "when-issue" activity, traders expected the upcoming three-year issue to sell at a yield of 2.241%, which was lower than the 2.301% at the previous three-year auction in April, Tradeweb data showed. The Treasury will sell $27 billion in 10-year notes on Wednesday and $19 billion in 30-year bonds on Thursday. These quarterly debt sales are expected to refund $55.4 billion to bondholders and to raise $28.6 billion in new cash for the federal government. May 7 Tuesday 11:19AM New York / 1519 GMT Price

US T BONDS JUN9 148-17/32 23/3210YR TNotes JUN9 123-236/256 10/32Price Current NetYield % Change

(bps)

Three-month bills 2.3775 2.4253 -0.001Six-month bills 2.3775 2.4399 -0.011Two-year note 99-242/256 2.2783 -0.031Three-year note 100-2/256 2.247 -0.030Five-year note 99-244/256 2.26 -0.033Seven-year note 100-32/256 2.3554 -0.04010-year note 101-104/256 2.462 -0.03830-year bond 102-128/256 2.8743 -0.034YIELD CURVE Last (bps) Net

Change (bps)

10-year vs 2-year yield 18.20 0.6530-year vs 5-year yield 61.30 -1.10

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 10.50 0.50

spread

U.S. 3-year dollar swap 6.75 0.00

spread

U.S. 5-year dollar swap 4.25 0.00

spread

U.S. 10-year dollar swap -2.00 0.25

spread

U.S. 30-year dollar swap -25.00 0.25

spread

(Reporting by Richard Leong Editing by Chizu Nomiyama and Susan Thomas)