June 2 (Bloomberg) -- Treasuries were little changed before an industry report that economists said will show pending U.S. home resales rose for a third month in April. The 10-year note erased losses as U.S. stock-index futures pared their gains. The Treasury will reduce the amount of notes and bonds it will sell next week by the largest amount since global credit markets collapsed, according to a Bloomberg News survey of primary dealers. Employment in the U.S. increased in May by the most since 1983, according to economists before the Labor Department's payrolls report later this week. "The market is going through a toss and turn," said Thomas Tucci, head of U.S. government bond trading in New York at Royal Bank of Canada, one of 18 primary dealers obligated to participate in Treasury auctions. "No one wants to be aggressively short on the market." Ten-year yields fell less than one basis point, or 0.01 percentage point, to 3.26 percent at 8:58 a.m. in New York, according to BGCantor Market Data. The price of the 3.5 percent security due in May 2020 increased 1/32, or 31 cents per $1,000 face amount, to 102 1/32. June contracts on the Standard & Poor's 500 Index increased 0.4 percent after earlier rising 0.8 percent. The yen slid against the dollar and Asian stocks declined as Japan's Prime Minister Yukio Hatoyama said he will resign. European stocks fell as the U.S. opened criminal and civil investigations into the BP Plc oil spill. U.S. Housing Pending purchases of existing homes in the U.S. climbed 5 percent in April following a 5.3 percent gain a month earlier, according to the median forecast in a Bloomberg News survey of 40 economists. The report from the National Association of Realtors is due at 10 a.m. New York time. The U.S. economy added 515,000 jobs in May after an increase of 290,000 in the previous month, according to the median forecast of 80 economists in a Bloomberg News Survey. The unemployment rate dropped to 9.8 percent from 9.9 percent, according to the median forecast in a separate survey. The report from the Labor Department is due at 8:30 a.m. New York time on June 4. "U.S. data continues to surprise on the upside," said Christoph Rieger, co-head of fixed-income strategy at Commerzbank AG in Frankfurt. "Appetite for U.S. paper at these levels is not so huge." Auction Outlook Nine of the 18 primary dealers estimate the Treasury will sell $37 billion in 3-year debt, $20 billion in 10-year notes and $13 billion in 30-year bonds on three consecutive days beginning June 8. The $70 billion would be down from $78 billion in the week of May 10. The administration of President Barack Obama is starting to scale back borrowing after expanding debt sales to finance annual budget deficits exceeding $1 trillion. "The Treasury has been fairly successful in placing its debt," said Anshul Pradhan, an interest-rate strategist in New York at primary dealer Barclays Plc. "We expect the reductions to continue, but the bulk will be in the front because the Treasury is still in the process of terming out debt." The U.S. sold $38 billion in three-year notes, $24 billion in 10-year debt and $16 billion in 30-year bonds last month. Treasury 10-year yields fell to a 13-month low of 3.06 percent on May 25 as Europe's debt crisis led investors to seek government securities. Two-year note yields dropped to 0.65 percent, the lowest this year, on May 6. U.S. debt returned 1.7 percent last month, the most since March 2009, according to Bank of America Merrill Lynch indexes. 'Dependent' on Europe "Treasuries are dependent on what is going on in Europe," said Kornelius Purps, a fixed-income strategist at UniCredit SpA in Munich. "Double-dip recession fears will be reinforced over the coming weeks, underpinning support for Treasuries." The rate that banks say they pay for three-month loans in dollars in London rose for the first time in three days, according to the British Bankers' Association. The London interbank offered rate, or Libor, for such loans increased to 0.538 percent, from 0.536 percent yesterday, the BBA said. --With assistance from Susanne Walker in New York. Editors: Dennis Fitzgerald, Dave Liedtka

Source