March 5 (Reuters) - Benchmark 10-year U.S. Treasury

yields fell to a one-month low on Tuesday after data showed U.S.

services industry growth slowed slightly and as investors

prepared for U.S. jobs data for February due on Friday for

further clues on Federal Reserve policy.

U.S. services industry growth slowed a bit in February amid

a decline in employment. A gauge of prices paid for inputs by

businesses also fell to 58.6 from an 11-month high of 64.0 in

January.

"The services number is the area the Fed is more focused

on," said Ellis Phifer, managing director of fixed income

research at Raymond James in Memphis, Tennessee, adding that the

inflation and employment components "are some of the biggest

factors."

A drop in yields before the data also reflects investors

positioning ahead of Friday's highly anticipated jobs report.

"The market is repricing itself ahead of that number," said

Phifer.

Employers added an estimated 200,000 jobs last month,

according to economists polled by Reuters.

It will follow much stronger-than-expected gains of 353,000

jobs in January that analysts have said was likely due in part

to seasonal factors.

Traders are evaluating when the U.S. central bank is likely

to begin cutting interest rates as growth remains relatively

strong and inflation gets closer to the Fed's 2% annual target.

Testimony by Fed Chair Jerome Powell to Congress on

Wednesday and Thursday will be watched for any new clues.

Other economic releases due this week will include the Job

Openings and Labor Turnover Survey (JOLTS) on Wednesday.

Benchmark 10-year yields were last down 8 basis

points on the day at 4.141% and got as low as 4.112%, the lowest

since Feb. 8.

Two-year yields dropped 5 basis points to 4.554%.

The inversion in the yield curve between two-year and 10-year

notes deepened by 2 basis points to minus 42

basis points.

Fed funds futures traders see a 72% probability the Fed will

begin cutting rates in June, up from 64% on Monday, according to

the CME Group's FedWatch Tool.