*

Fed's Powell says December rate cut not guaranteed

*

US Treasury yields rise amid lower rate-cut odds

*

Government shutdown's effect on data may affect policy

By Tatiana Bautzer

NEW YORK, Oct 30 (Reuters) - U.S. Treasury yields

continued to rise on Thursday as markets saw lower odds of

another Federal Reserve interest rate cut in December and

wondered about the effects of a prolonged U.S. government

shutdown on monetary policy.

In a press conference on Wednesday after the U.S. central bank

announced a widely expected quarter-percentage-point rate cut,

Fed Chair Jerome Powell said another cut in December "is not a

foregone conclusion." Investors were caught off guard by the

remark.

Early on Thursday, the yield on the benchmark U.S. 10-year

Treasury note rose 2.3 basis points (bps)

to 4.095%, after the largest rise since June on Wednesday.

The two-year U.S. Treasury yield, which typically

moves in step with interest rate expectations, was up 1.8 bps at

3.604%.

The availability of U.S. economic data amid the federal

government shutdown, now in its 30th day, is a key question to

investors.

"We may have another month in which labor market data will

not be collected if the government shutdown does not end soon,"

said Guy LeBas, chief fixed income strategist at Janney Capital

Management in Philadelphia. "We expect to have private data

available, but it's not clear how the Fed will consider it".

LeBas says the odds for a rate cut at the Fed's December 9-10

meeting are still quite high despite the lack of data. The

reduction of import tariffs on products coming from China to the

U.S. also may help reduce pressures, he added.

A closely watched part of the U.S. Treasury yield curve

measuring the gap between yields on two- and 10-year Treasury

notes, seen as an indicator of economic

expectations, was at a positive 47.3 basis points, little

changed from levels late on Wednesday.

The European Central Bank, meanwhile, kept interest rates

unchanged for the third meeting in a row on Thursday and offered

no hints about future moves as it enjoys a rare period of low

inflation and steady growth, even in the face of trade

turbulence.