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TREASURIES-U.S. Treasuries lower a day before payrolls report

NEW YORK, Nov 1 (Reuters) - NEW YORK, Nov 1 (Reuters) -

U.S. Treasuries prices posted small losses on Thursday a day before the influential monthly U.S. payrolls report as risk markets gained at the expense of safe-haven U.S. government debt. Trade was less than normal as workers struggled to get to offices in the vast area along the eastern U.S. seaboard hit by super-storm Sandy. U.S. stocks opened higher and China's stock markets rose after official and private China PMI manufacturing surveys for October suggested China's economy is finally regaining traction. China's central bank also conducted its largest-ever net fund injection this week. The move signalled its intention to keep money market conditions relatively loose and support lending to the real economy before a once-in-a-decade political transition, starting on Nov. 8 at the 18th Party Congress. ``The main reason Treasuries were down is that the Chinese central bank continues to inject record levels of liquidity into the market and the China PMI was better than expected,'' said Steven Van Order, fixed-income strategist at Calvert Investment Management in Bethesda, Maryland. U.S. economic data released on Thursday did not disturb the direction earlier. New claims for U.S. jobless benefits slipped in the latest week and the ADP National Employment Report, a private sector report on the labor market, said U.S. companies added 158,000 new jobs in October. An industry group reported that U.S. consumer confidence rose to its highest level in more than four years and the Institute for Supply Management's manufacturing index read 51.7 in October, slightly above economists' consensus forecast. Deutsche Bank Securities strategist Alan Ruskin said the ISM report showed ``the worst has been seen for the time being in the manufacturing sector with the nadir hit in the July-August period'' while Decision Economics senior economist Pierre Ellis called the sector ``precariously steady'' and vulnerable ``to any new weakening in orders''.l In mid-morning trade, the benchmark 10-year note was down 6/32, its yield up to 1.72 percent from 1.70 percent at Wednesday's close. Combined with a lack of fresh news from Europe overnight, the China news and the U.S. economic data added up to a little pressure on Treasuries prices in thin trade, Van Order said. ``The markets are functioning, but the depth is not near the usual yet,'' Van Order said. The U.S. payrolls report will set the tone for the U.S. Treasury market next week and likely for the month ahead so prices should remain in a tight range at least until the report is released on Friday morning, Van Order said. A much stronger-than-forecast payrolls report on Friday could encourage some selling in Treasuries while a weaker-than-forecast report would likely spur buying, traders said. Traders also have their eye on upcoming supply next week when the Treasury will sell $32 billion in three-year notes, $24 billion in 10-year notes, and $16 billion in 30-year bonds. Also in the offing are a potential backlog of municipal and corporate debt issuance from issuers who have delayed offerings because of the storm and may wait until after next week's presidential election as well, Van Order said. ``We could see some pent-up issuance in coming weeks,'' he said. The 30-year bond slid 25/32, its yield rising to 2.89 percent from 2.86 percent on Wednesday. ``Accounts are adding to steepening exposures,'' said Navigate Advisors LLC managing director Tom di Galoma, referring to the widening difference in yields between 10- and 30-year maturities as some anticipate eventual economic growth that could foster inflation in the longer term.