* ISM July manufacturing index contracts for second month in a row * Fed statement due in afternoon; ECB and BoE meetings on Thursday * Markets look for dovish language from Fed By Ellen Freilich NEW YORK, Aug 1 (Reuters) - U.S. Treasury debt prices slipped on Wednesday as markets waited for an afternoon statement from the Federal Reserve that is expected to reveal policymakers' readiness to act but stop short of aggressive stimulus measures for now. Prices weakened after the ADP National Employment Report showed a stronger-than-expected 163,000 increase in private payroll jobs in July, beating economists' forecasts for a 120,000 rise. Benchmark 10-year Treasury notes were down 12/32, their yields rising to 1.51 percent from 1.49 before the figures came out and 1.47 percent late on Tuesday. With the Fed statement imminent, however, a midmorning report showing U.S. manufacturing shrank for the second month in a row in July elicited little response. The policy-setting Federal Open Market Committee is expected to release a statement around 2:15 p.m. (1815 GMT). "All eyes today are clearly on the FOMC announcement," said Eric Stein, vice president and portfolio manager at Eaton Vance Investment Managers. After that, "the focus will switch to the European Central Bank and finally to payrolls on Friday." Economists said the Fed could push back its guidance for when it sees the need for an eventual rate hike into 2015 from the current guidance of late 2014, a move that could signal the depth of the central bank's concerns about the economy and hint at new measures ahead. "The Fed could announce an extension of the near-zero interest-rate policy. That's almost a maintenance thing since they'll have to do it at some point. That's not going to excite anybody," said Steve Van Order, fixed income strategist with Bethesda, Maryland-based Calvert Investment Management, with more than $14.5 billion in assets under management. Others expect the Fed to offer even less. "We're probably just going to see a continuation of existing policy," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, LLC in Menomonee Falls, Wisconsin. "The economic data hasn't been all that great, but it's not bad enough to cause the Fed to do additional easing." Jacobsen said that could disappoint some people "who are banking on the central bank to prop up asset prices" with another round of Fed bond purchases. Analysts believe policymakers would wait until at least September before taking such action, giving them more time to set out the case for their preferred method for easing policy in speeches between now and then. Until then, accommodative language could be used to soothe any disappointment at a lack of forceful action. "I expect dovish language, but no major action," said Tanweer Akram, senior economist at ING Investment Management in Atlanta, with $160 billion in assets under management. "The Fed's assessment of the economy and financial conditions is likely to be on the side of weakness." The Fed will issue its statement just a day before a key meeting of the European Central Bank. ECB President Mario Draghi raised speculation of more ECB purchases of Italian and Spanish bonds by saying he would do "whatever it takes to preserve the euro." Global stock markets rallied sharply late last week on hopes that at least one of the two institutions would deliver some sort of fresh stimulus program. But investors have toned down their expectations since then. The 30-year Treasury bond was down 30/32, its yield rising to 2.59 percent from 2.55 percent late on Tuesday. The Treasury announced it would sell $32 billion in three-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds next week. The $72 billion quarterly refunding will raise $17.8 billion of new cash and refund $54.2 billion maturing securities. The Treasury also said it planned to launch floating rate notes, but the program was at least a year away. It said it had been building operational capabilities to allow for negative rate bidding, but that no decision had yet been made to allow such bidding. The Treasury also said it expected the debt limit to be reached near the end of 2012 but had enough leeway to let the government meet its obligations until early 2013.

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