(Adds ECB's response to report on its bond-buying programme)
* Yields rise after report on ECB tapering spooks investors
* Friday's jobs report for September in focus
* Yellen speech next week watched for rate view
TOKYO/NEW YORK, Oct 5 (Reuters) - U.S. Treasury prices dropped and yields jumped to almost two-week highs after a report that the European Central Bank may taper asset purchases spooked investors.
Bloomberg reported that ECB policymakers were building consensus that quantitative easing would need to be wound down gradually when the central bank decides to end the program.
An ECB media officer tweeted later on Tuesday, however, that the central bank's decision-making body has not discussed reducing the pace of its monthly bond buying.
Investors are increasingly skeptical that central bank attempts to regenerate growth and inflation will be effective, and worry that asset purchase programs are creating bubbles and distorting market fundamentals.
"What the market has been telling you for the last month-and-a-half is that central bank policy has run out of room and they need something else to transition to because it's not working, and the question is what that is going to be," said Tom Tucci, head of Treasuries trading at CIBC in New York.
The yield on the benchmark 10-year notes rose 5.9 basis points on Tuesday to 1.683 percent, before pulling back slightly early on Wednesday in Asia to 1.672 percent.
Since Friday, there has been heavy buying of "put" options on 10-year notes, contracts that gain in value if Treasury prices fall, said CIBC's Tucci.
The buying comes ahead of Friday's highly anticipated September U.S. jobs report and a speech by Fed Chair Janet Yellen on Oct. 14 at a Boston Fed economics conference.
Employers are forecast to have added 175,000 jobs in September, according to the median estimate of 100 economists polled by Reuters.
Investors are expected to focus on whether August's weaker-than-expected 151,000 jobs gains will be revised upward.
Yellen's speech the following Friday will be watched for signals of an impending interest rate hike.
"I think the most important thing in the next couple of weeks is Yellen's speech at the Boston Fed economics conference," said Lou Brien, a market strategist at DRW Trading in Chicago, noting that the conference was used by former Fed Chair Ben Bernanke in 2010 to indicate a new round of stimulus was coming.
It may be Yellen's last chance before the Fed's November meeting to indicate if a hike is likely that month.
Traders are pricing in a 13 percent chance that the Fed will raise rates in November and a 63 percent chance of an increase in December, according to the CME Group's FedWatch Tool.
Richmond Federal Reserve President Jeffrey Lacker said on Tuesday there was a strong case for raising interest rates. (Reporting by Karen Brettell in New York; Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Shri Navaratnam)