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TREASURIES-Yields higher as new coronavirus cases reportedly decline

By Ross Kerber

(Updates with market activity, results of 10-year auction) By Ross Kerber BOSTON, Feb 12 (Reuters) - U.S. Treasury yields rose on Wednesday amid renewed risk tolerance after a reported drop in the number of new coronavirus cases in China alleviated some concerns about economic growth. The benchmark 10-year yield was up 4.8 basis points in afternoon trading at 1.6385%. Investors sold safe-haven bonds and bid up other assets, including U.S. stocks, also encouraged by the latest quarterly earning reports. "There seems to be better risk appetite," said John Briggs, head of strategy, Americas, at NatWest Markets. Wednesday's trading, he said, reflects "a removal of the flight-to-quality" seen in recent days. On Wednesday afternoon, the U.S. Treasury Department said it accepted $27 billion in bids for 10-year notes, out of $69.67 billion worth of bids tendered, at a median yield of 1.577%. Briggs said Treasury markets were likely not affected by comments from U.S. Federal Reserve chairman Jerome Powell, who on Wednesday reiterated his confidence in the sustainability of the record-long U.S. economic expansion. "There’s no reason why the current situation of low unemployment, rising wages, high job creation - there’s no reason why it can’t go on," Powell told the Senate Banking Committee in his second day of congressional testimony. China reported its lowest number of new coronavirus cases since January, lending weight to a prediction by its top medical adviser that the outbreak will end by April. However, it was still unclear to what extent economic growth would take a hit from the virus, which has killed more than 1,100 people, shuttered businesses in China and briefly disrupted a global stock market rally in the past weeks. In Washington, U.S. Treasury Secretary Steven Mnuchin said that the negative economic impact from the coronavirus outbreak is a one-time event that will not last beyond 2020. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 2.9 basis points at 1.4458 % in afternoon trading. February 12 Wednesday 4:50PM New York / 2150 GMT Price Current Net Yield % Change (bps) Three-month bills 1.545 1.5769 -0.002 Six-month bills 1.515 1.5521 0.002 Two-year note 99-221/256 1.4458 0.029 Three-year note 99-220/256 1.4232 0.032 Five-year note 99-158/256 1.4552 0.046 Seven-year note 99-160/256 1.557 0.048 10-year note 101 1.6385 0.048 30-year bond 106-40/256 2.0958 0.044 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 4.25 1.25 spread U.S. 3-year dollar swap 2.50 2.00 spread U.S. 5-year dollar swap 0.50 1.25 spread U.S. 10-year dollar swap -4.75 1.25 spread U.S. 30-year dollar swap -31.75 1.75 spread (Reporting by Ross Kerber; Editing by Chizu Nomiyama and Alistair Bell)