By Richard Leong

NEW YORK, Feb 20 (Reuters) - U.S. Treasury debt prices rose

on Wednesday, even after records of the Federal Reserve's

January meeting showed policymakers discussed the slowing or

stopping of Fed bond purchases that are aimed at reducing

unemployment.

The bond market weakened briefly on the latest minutes from

the Federal Open Market Committee, the U.S. central bank's

policy-setting group, but rebounded as a fall in stock prices on

the news rekindled some safe-haven bids for bonds.

'Generally, these are more hawkish than the market had

expected and show a waning commitment to the QE program,' said

David Keeble, global head of interest rate strategy in Credit

Agricole Corporate & Investment Bank in New York.

The U.S. central bank's third round of bond buying, dubbed

QE3, has propped up the prices of Treasuries, mortgage-backed

securities and other fixed income products.

Fears that the Fed might end QE3 before the end of 2013,

initially ignited by the minutes of the Fed's December policy

meeting released in early January, have partly kept benchmark

yields near 2 percent.

The minutes released on Wednesday of the Fed's Jan. 29-30

meeting intensified those fears with more talk of what could

lead to a shift in the bond-buying program.

'A number of participants stated that an ongoing evaluation

of the efficacy, costs and risks of asset purchases might well

lead the committee to taper or end its purchases before it

judged that a substantial improvement in the outlook for the

labor market had occurred,' the minutes said.

But persistent worries about possible steep federal spending

cuts and an uncertain election outcome in Italy have fed safety

bids and curbed large-scale selling in Treasuries, analysts and

traders said.

Moreover, some investors believed 10-year Treasury notes

were appealing whenever their yield approached 2.05 percent,

analysts said.

Treasuries began the day lower in price but turned around as

stock losses deepened.

Benchmark 10-year Treasury notes were trading

5/32 higher in price to yield 2.010 percent, down 1.8 basis

points from late Tuesday, while 30-year bonds were

6/32 higher to yield 3.199 percent, down from 3.209 percent late

on Tuesday.

Wall Street stocks added to earlier losses after the Fed

minutes sparked fears of less stimulus from the central bank.

The Standard & Poor's 500 index, which started the day

near a five-year peak, closed down more than 1 percent lower.

The Treasuries market showed little impact from data showing

groundbreaking on new U.S. homes fell in January, although new

permits for construction rose to a 4-1/2-year high. The

government also said U.S. producer prices rose in January for

the first time in four months.

Traders will receive a heavy calendar of data on Thursday

including the consumer price index, weekly jobless claims and

existing home sales.

They will also prepare to buy $9 billion worth of 30-year

Treasury Inflation Protected Securities.

QE INFINITY, MAYBE NOT

The bond market showed resilience from its initial sell-off

on the Fed minutes, but some investors acknowledged yields will

ultimately rise once the Fed begins its exit strategy from

quantitative easing.

At the end of last year, some traders and analysts spoke of

the possibility the Fed would buy bonds indefinitely, a move

dubbed QE Infinity, to support the U.S. economy.

The last two sets of FOMC minutes signaled policy-makers

have started to look at steps to bring an end to the current era

of unprecedented monetary stimulus that lifted the economy out

of recession and financial crisis.

'They are beginning to take account for the costs and

consequence of their action. That's why the market has turned

around,' said Richard Schlanger, portfolio manager at Pioneer

Investments in Boston.

Still, there are many hurdles the economy must clear before

the Fed would end its bond-purchase program, currently at $85

billion a month, Schlanger said, adding that benchmark yields

will likely trade around current levels.

The main hurdle remained the jobless rate, which stood at a

relatively high 7.9 percent in January. Economists forecast it

would take many more months to get unemployment below 6.5

percent, which the Fed has cited as a threshold before it would

consider removing policy accommodation.

(Additional reporting by Chris Reese; Editing by Nick Zieminski

and Leslie Adler)

((richard.leong@thomsonreuters.com)(+1 646 303 6313)(Reuters

Messaging:

richard.leong.thomsonreuters.com@thomsonreuters.net)(Twitter

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(-------MARKET SNAPSHOT AT 4:28 p.m. EST (2128 GMT)------- March T-Bond 143-08/32 (+06/32) March 10-Year note 131-17/32 (+06/32) Change vs Current Nyk yield Three-month bills 0.12 (+0.01) 0.122 Six-month bills 0.13 (+0.00) 0.131 Two-year note 99-31/32 (+01/32) 0.262 Five-year note 100-02/32 (+04/32) 0.862 10-year note 99-29/32 (+05/32) 2.010 30-year bond 98-19/32 (+06/32) 3.199 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 15.50 (+0.75) U.S. 3-year dollar swap spread 14.50 (+0.25) U.S. 5-year dollar swap spread 15.75 (+0.25) U.S. 10-year dollar swap spread 7.25 (+0.25) U.S. 30-year dollar swap spread -14.00 (+0.50))

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