* Euro zone yields fall, weigh on Treasuries
* U.S. Treasuries seen as oversold
* U.S. Treasury to sell $56 billion in notes and bonds (Adds analyst comment, details on curve steepening, bullet points, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 10 (Reuters) - U.S. Treasury yields slipped on Monday, in line with weak European markets, as sharp gains following Friday's strong U.S. non-farm payrolls report prompted investors to consolidate positions.
U.S. long-dated yields, which move inversely to prices, fell for just the second time in nine days.
"This was a retracement of last week's losses," said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco.
"The market is kind of settling down at this point. The perception in the market was that the market got oversold last week. So we're in a wait-and-see mode right now," she added.
A surprisingly strong surge in U.S. jobs in June, even with low wage growth, affirmed expectations that the world's largest economy was steadily improving and supported the Federal Reserve's credit tightening path.
That has lifted Treasury yields, which had been rising the last few weeks on a round of generally solid U.S. economic data.
U.S. Treasuries have also been moving in tandem with global markets.
On Monday, euro-zone bond yields fell, with investors buying back bonds after a two-week sell-off. The yield on Germany's 10-year government bond, the benchmark for the region, was headed for its biggest one-day fall in almost four weeks, down 4 basis points at 0.54 percent.
In late trading, benchmark 10-year Treasury yields fell to 2.373 percent, from 2.393 percent last Friday. After Friday's jobs report, U.S. 10-year yields hit an eight-week high of 2.398 percent.
U.S. 30-year yields slid to 2.927 percent, from 2.935 percent last Friday. They hit a more than six-week peak of 2.943 percent after the U.S. jobs data.
On the front-end of the curve, U.S. two-year yields slipped to 1.387 percent, from Friday's 1.407 percent.
The U.S. Treasury this week will auction a combined $56 billion in notes and bonds, including $24 billion in three-year notes on Tuesday, $20 billion in reopened 10-year notes on Wednesday, and $12 billion in opened 30-year bonds on Thursday.
The U.S. yield curve continued to steepen on Monday. The yield gap between shorter-dated and longer-dated Treasuries widened on Monday, with the spread between two-year and 10-year yields at 98.40 basis points.
Last Friday in the aftermath of the jobs report, the curve was at its steepest in seven weeks.
Analysts at Action Economics said worries over the unwinding of stimulus has overwhelmed bonds and overshadowed the bullish impact of tepid inflation. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Tom Brown and Richard Chang)