KAMPALA (Reuters) - The Ugandan shilling slipped against the dollar for a second straight session on thin volumes on Tuesday, but some traders said an upcoming Treasury bond auction would offer the currency some support. At 0935 GMT, commercial banks in Kampala quoted the local currency at 2,597/2,607 against the dollar, weaker than Monday's close of 2,580/2,590. "We're moving towards the end of month and we normally have a surge in dollar demand which exerts pressure on the shilling and that's what we're seeing now," said Lucas Ochieng, treasurer at Orient Bank Uganda. Unprecedented demand for the greenback and tight supply, an ailing shilling in neighbouring Kenya -- the region's biggest economy -- and speculative trading drove the shilling through a series of record lows in the first half of the year. It hit an all-time low of 2,710 on June 30 before Bank of Uganda, the central bank, flexed its muscles and sold off hard currency, stemming the losses. "There's huge demand for the greenback in the interbank (market) which is undermining the shilling now but it will probably be short-lived," said Faisal Bukenya, head of market making at Barclays Bank Uganda. Bukenya predicted substantial offshore interest in Wednesday's auction of two-year bonds worth 85 billion shillings. Bank of Africa said in a market report that it saw 2,650 as the next key psychological level.

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