TREASURIES-U.S. bond prices change little as U.S. data mixed

Reuters

* Treasury sells $35 bln in 5-year notes, high yield 1.300

percent

* U.S. ex-auto retail sales grew modestly in August

* U.S. home prices posted best yearly gain in over 7 years

* Fed to begin two-day meeting, analysts see no surprises

By Luciana Lopez and Richard Leong

NEW YORK, Oct 29 (Reuters) - Prices for U.S. Treasuries were

little changed on Tuesday as mixed data underscored uncertain

prospects for the economy, with yields close to a three-month

low as investors sought direction.

Light trading volumes suggested traders were reluctant to

make big bets as the Federal Reserve began a two-day policy

meeting on Tuesday.

A sale of $35 billion in 5-year notes saw decent if

unspectacular demand, with a high yield of 1.300 percent and a

bid-to-cover ratio of 2.65.

The sale followed a well-received auction of 2-year debt on

Monday. The Treasury will complete this week's coupon debt

offering on Wednesday with a $29 billion sale of new seven-year

notes.

Benchmark yields have been stuck in a narrow 7 basis point

range after they fell to a three-month low of 2.471 percent last

Wednesday in the wake of a disappointing September jobs report.

"The market is directionless. There is no urgency to push

yields higher or lower," said Lou Brien, a market strategist at

DRW Trading in Chicago.

Economic data did little to point the way for investors.

While an a S&P/Case-Shiller report showed the biggest

year-over-year home price increase in seven years, consumer

confidence sagged badly in October.

And the Commerce Department said a hefty drop in car demand

led to a surprise 0.1 percent dip in retail sales in September.

The Federal Reserve meeting that concludes on Wednesday

could continue the status quo.

The Federal Open Market Committee, the central bank's

policy-setting group, will probably maintain their current pace

of bond-buying in a bid to prop up the economy after a federal

government shutdown earlier this month, which dragged on the

world's biggest economy.

"The FOMC statement will be purposely bland," said Jim

Vogel, an interest rates strategist with FTN Financial in

Memphis, Tennessee.

The impasse in Congress that led to the shutdown highlighted

the political risk overshadowing markets now, a worry that could

make the Fed reluctant to pull back now.

"It's going to be hard for the Fed to do much of anything

other than what they're doing until March of next year, maybe

even April of next year," said Kevin Giddis, head of fixed

income capital markets at Raymond James in Memphis, Tennessee.

The effects of a divided Congress, he said, "are a lot more

punitive to the economy."

Benchmark 10-year Treasury notes were up 1/32 in

price with a yield 2.509 percent, from 2.512 percent late on

Monday. The 30-year bond was 12/32 lower, yielding

3.622 percent, from 3.6145 percent late in the previous day.

The selling pressure on longer-dated bonds was mitigated by

a $1.464 billion bond purchase by the Fed, part of its $85

billion monthly bond-purchase stimulus program, known as

QE3.

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