NEW YORK, July 18 (Reuters) - U.S. Treasury yields

modestly pared declines on Friday after data showed housing

starts on the world's largest economy rose 4.6% in June,

exceeding economists' forecasts.

The benchmark 10-year yield was down 3.7 basis points (bps)

at 4.426% after the housing data, compared with

4.435% right before the data's release. The two-year yield,

which reflects interest rate expectations, also trimmed its fall

to 3.712%, from 3.884%.