By Karen Brettell

NEW YORK, Feb 14 (Reuters) - U.S. Treasuries yields edged

back from 10-month highs on Thursday after data showed that the

euro zone's two largest economies shrank more than expected late

last year, helping boost demand for safe-haven debt.

The German economy contracted 0.6 percent in the final

quarter of 2012, the worst performance since 2009, while

France's fell 0.3 percent, which was slightly worse than

forecast.

The news pushed the euro down against the dollar and boosted

bond buying, helping benchmark 10-year note yields fall from

10-month highs of 2.06 percent reached in overnight trading.

'Treasuries followed the rally in (German) bunds, which was

driven by weak GDP data,' said Carl Lantz, an interest rate

strategist at Credit Suisse in New York.

The debt briefly pared some price gains after data showed

that the number of Americans filing new claims for unemployment

benefits fell more than expected last week, pointing to a

continued steady improvement in labor market conditions.

'The market is viewing this as another sign that economic

momentum continues to be reasonably strong. Jobs are key because

of the Fed focus on unemployment and because now we need labor

income to continue to be quite strong because that will help

offset the negative spending implications of the payroll tax

increase,' Lantz said.

Ten-year notes were last up 10/32 in price to

yield 2.03 percent.

The notes have been pushing up against technical support at

around 2.03 percent to 2.06 percent, which is the top end of

their trading range for the past few weeks. A break above this

level could send yields up towards the 2.20 percent area,

analysts and traders said.

Prices gained even as the Treasury prepared to sell $16

billion in 30-year bonds on Thursday, it final sale of $72

billion in new coupon bearing debt this week.

Thirty-year bonds rose 18/32 in price to yield

3.21 percent. Traders expect the new bonds to

price stronger at around 3.19 percent, according to trading in

the 'when issued' market.

The Federal Reserve will also buy between $4.75 billion and

$5.75 billion in debt due 2017 to 2018 on Thursday as part of

its ongoing bond purchase program meant to help stimulate the

economy.

(Editing by Chizu Nomiyama)

((karen.brettell@thomsonreuters.com)(+1 646 223 6274)(Reuters

Messaging:

karen.brettell.thomsonreuters.com@thomsonreuters.net))

(-------MARKET SNAPSHOT AT 8:59 a.m. EST (1359 GMT)------- Change vs Current Nyk yield Three-month bills 0.095 (+0.01) 0.096 Six-month bills 0.125 (+0.01) 0.126 Two-year note 99-31/32 (+) 0.274 Five-year note 99-32/32 (+05/32) 0.878 10-year note 99-25/32 (+3-11/32) 2.024 30-year bond 91-10/32 (+17/32) 3.205 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 15.00 (-0.25) U.S. 3-year dollar swap spread 14.00 (unch) U.S. 5-year dollar swap spread 15.00 (+0.50) U.S. 10-year dollar swap spread 6.50 (-2.25) U.S. 30-year dollar swap spread -17.50 (+0.25))

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