TREASURIES-U.S. yields slide on Ukraine tensions, caution before Fed meeting

* U.S. 30-year, 10-year yields hit more than 1-week low * U.S. 2-year note auction shows solid results * Investors brace for Fed policy meeting this week (Adds new comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Jan 24 (Reuters) - U.S. Treasury yields on most maturities slid on Monday, as investors grew nervous about a potential conflict between Russia and Ukraine as well as a Federal Reserve that is widely expected this week to flag an interest rate hike in March. A strong U.S. 2-year note auction, meanwhile, also added to bids on Treasuries, further pushing yields lower. U.S. benchmark 10-year and 30-year yields, along with those on the front end such as 2-year and 5-year notes, slid to more than one-week lows earlier. Both the U.S. 2-year and 5-year notes reflect interest rate expectations. After selling off for most of the trading session, U.S. stocks rallied to close higher as bargain-hunters emerged. Last week, the S&P 500 index and the Nasdaq Composite suffered their largest weekly percentage plunges since March 2020, undermined by expectations of a hawkish Fed. Treasuries, however, were not in panic mode just yet, with moves in yields range-bound overall. Investors are focused on the Fed's two-day policy meeting, which starts on Tuesday, amid expectations the central bank will signal that it plans to raise rates by 25 basis points in March. The Fed would be tightening policy for the first time since it slashed its overnight benchmark interest rate to the near-zero level soon after the start of the coronavirus pandemic nearly two years ago. Fed funds futures, which track short-term rate expectations, have priced in a total of four Fed increases this year. Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis, believes the recent volatility in equity markets could soften the Fed's hawkish tone a little bit when it releases its policy statement on Wednesday, but it won't necessarily change its approach. "It's easy to talk tough about inflation and what it's going to do about it when the S&P 500 is up 18% annualized five years running. All of a sudden, when the market has been doing what it has been doing the last few days, that tough talk becomes much more difficult," Merz said. Aside from the Fed, investors fretted about tensions in Ukraine. NATO said on Monday it was putting forces on standby and reinforcing Eastern Europe with more ships and fighter jets. The move suggested that the West is buckling up and expects Russia to attack Ukraine after gathering about 100,000 troops within reach of the Russian-Ukrainian border. Russia though denies any intention of invading. In afternoon trading, the benchmark U.S. 10-year yield was flat on the day at 1.7511%, after earlier hitting an 11-day low of 1.7070%. U.S. 30-year yields rose nearly 4 basis points to 2.0986%, reversing an earlier fall. They also slid to more than a one-week low of 2.0330% earlier in the session. On the shorter-end of the curve, U.S. 2-year and 5-year yields slipped to 0.9628% and 1.5323%, respectively. The U.S. 2-year note auction, meanwhile, showed solid results, helped by the decline in Treasury prices since early December. The auction's high yield was 0.99%, compared with the expected rate of 1.004% at the bid deadline, suggesting investors were willing to buy the note at a lower rate. The bid-to-cover ratio, a gauge of demand, was 2.81, the highest since April 2020, compared with an average of 2.5. Indirect accounts, which include foreign central banks, took 66.0% of the total, the second highest on record going back to the summer of 2003, according to Action Economics. January 24 Monday 3:44 PM New York / 2044 GMT Price Current Net Yield % Change (bps) Three-month bills 0.165 0.1674 -0.003 Six-month bills 0.35 0.3555 0.001 Two-year note 99-153/256 0.9607 -0.032 Three-year note 99-168/256 1.2431 -0.030 Five-year note 98-174/256 1.5289 -0.018 Seven-year note 97-230/256 1.6976 -0.004 10-year note 96-164/256 1.7493 0.002 20-year bond 97-128/256 2.1557 0.028 30-year bond 95-36/256 2.095 0.033 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 17.50 -0.50 spread U.S. 3-year dollar swap 13.75 -1.50 spread U.S. 5-year dollar swap 7.75 -0.75 spread U.S. 10-year dollar swap 5.75 -0.25 spread U.S. 30-year dollar swap -18.75 -0.75 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Alison Williams and Paul Simao)