TREASURIES-Bonds rise on escalation of Japan nuclear crisis

* Bonds rally on safe haven bid from Japan

* Rally could reverse as Treasury sells $66 bln in debt

* TIPS breakevens decline on oil, commodity price declines
(Adds comments, updates prices)

NEW YORK, April 12 (Reuters) – Prices for U.S. government
debt rallied on Tuesday after Japan raised the severity level
of the crisis at its quake-stricken nuclear plant, renewing
safety bids for bonds and other less risky investments.

Lower stock and commodity prices, together with
weaker-than-expected data on U.S. trade and German business
sentiment, also stoked demand for bonds just ahead of the a $32
billion auction of three-year Treasuries.

“There was some geopolitical risk events overnight and some
better buying today,” said Suvrat Prakash, interest rate
strategist at BNP Paribas in New York.

However, “a lot of people like to position short Treasuries
as supply comes and hits the market, so I would expect this
move to reverse as the week goes on,” he added.

The Treasury will also sell $21 billion and $13 billion in
10-year and 30-year reopenings on Wednesday and Thursday.

Benchmark 10-year notes (US10YT=RR: Quote, Profile, Research) last traded up 22/32 in
price for a yield of 3.52 percent, down 7 basis points from
late on Monday.

Thirty-year bonds (US30YT=RR: Quote, Profile, Research) rose more than a point in
price, and were last up 1-6/32 in price to yield 4.59 percent,
down from 4.67 percent late on Monday.

Breakeven rates fell on a further decline in oil and
commodity prices and top Federal Reserve officials said the
U.S. central bank is far from ready to raise interest rates.
For more see [ID:nN11296347]

The 10-year breakeven rate, or the yield spread between
10-year Treasury Inflation-Protected Securities and regular
10-year government debt, stood at 2.61 percentage points, down
3 basis points from late Monday.
(Reporting by Karen Brettell and Richard Leong; Editing by
Theodore d’Afflisio)

TREASURIES-Bonds rise on escalation of Japan nuclear crisis