* U.S. 5-year note auction shows strong results
* Treasury prices rise following auction
* Treasury will next offer $32 bln in U.S. 7-year notes
(Recasts, add 5-year note auction results, updates prices) NEW YORK, Dec 24 (Reuters) - U.S. Treasury prices rose on Tuesday, pushing yields lower in generally thin trading, bolstered by a strong U.S. five-year note auction in a light market ahead of the holidays. The Treasury market will be closed on Wednesday for the Christmas holiday. U.S. yields across most maturities hit session lows following the five-year auction. The Treasury's $41 billion auction of five-year notes drew strong demand and priced at 1.756%, well below the 1.772% yield at the bid deadline. Tuesday's yield was the highest since July, analysts said. Bids totaled $102.0 billion for a 2.49 bid-to-cover ratio, consistent with the 2.50 cover last month, but slightly higher than the 2.37 average. Indirect bidders, which includes financial institutions and foreign central banks, accounted for 62.4% of the bids, roughly in line with November's 64.8% and higher than the 59.1% average. "The auction was surprisingly good and caught the market off guard," said Lou Brien, market strategist at DRW Trading in Chicago. Robust demand for U.S. 5-year notes lifted Treasury prices on a day with scant volume, after trading weaker for most of the New York morning session. "Maybe some people that were bidding on the auction laid back a little bit," Brien said. "The surprising strength of the auction made people think that they missed the boat, so they're piling back into the market." In late-morning trading, U.S. 10-year yields dropped to 1.915% from 1.935% on Monday, while those on U.S. 30-year bonds were at 2.343%, down from 2.362% on Monday. After the auction, U.S. 5-year note yields fell to 1.734%, compared with Monday's 1.754%. On the short end of the curve, U.S. two-year yields fell to 1.648%, from Monday's 1.657%, after earlier hitting a two-week peak of 1.671%. The yield curve narrowly steepened on Tuesday, with the spread between the two-year and 10-year note yields at 26.50 basis points. The Treasury will next auction $32 billion in 7-year notes on Thursday. "Look for a similar move on Thursday for the 7-year before investors start to consider their year-end purchases on Friday and December 30," said Jim Vogel, senior rates strategist at FHN Financial in Memphis, Tennessee.
December 24 Tuesday 10:57 AM New York/1557 GMT
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(Reporting by Gertrude Chavez-Dreyfuss; Editing by Alex Richardson)