NEW YORK, May 28 (Reuters) - Yields on U.S. Treasuries

rose on Wednesday ahead of a record $70 billion five-year note

auction later in the session that could once again test demand

for the country's government debt.

A slew of large corporate bond issues seeking to take

advantage of improving market conditions also lifted Treasury

yields, analysts said. Corporate supply has spurred selling of

Treasuries, pushing their yields higher for hedging purposes.

Ahead of a bond and note auction, investors tend to sell

Treasuries to push up the yield before buying them back at a

lower price, a practice called concession.

In the case of corporate bonds, Wall Street dealers

typically looked to lock in borrowing costs for these deals that

they are underwriting. As part of that process, a dealer sells

Treasuries as a hedge to lock in the borrowing cost on the bond

issue before the deal is completed. Once the bond is sold, the

dealer buys Treasuries to exit the "rate lock."

In midday trading, the yield on the benchmark U.S. 10-year

Treasury note rose 6.1 basis points (bps) to

4.495%. U.S. 30-year yields advanced 6.2 bps to

5.00%, as demand for longer-dated securities has

been weakening in major markets.

"The results on the two-year auction on Tuesday were fine,

but markets are worried about the five-year and seven-year

auctions," said Stan Shipley, fixed income strategist at

Evercore ISI.

The Treasury is expected to offer $44 billion in seven-year

notes on Thursday.

Ahead of the auction, U.S. five-year yields were up 5.7 bps

at 4.079%.

New announcements of corporate investment grade offerings

also contributed to elevate yields, Shipley added. Among the

issuers are BNG Bank, AT&T, Georgia Pacific, Cascades and

Florida Gas Transmission, according to Action Economics.

Indexes for manufacturing and services activities released

by the Richmond Fed on Wednesday that showed deceleration in

both sectors did not have a lot of influence on markets,

according to Mischler Financial Group managing director Tom Di

Galoma.

Overnight, the Japanese government had another poor result in

its 40-year bond auction on Wednesday, contributing to global

pressure on longer term yields. Japanese government bonds have

become the "canary in the global duration coalmine," Goldman

Sachs analysts wrote last week after a very poor sale of 20-year

bonds.

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

typically moves in step with interest rate expectations, rose

4.3 bps to 3.992%.

After the release of the Treasury auction results, investors

are also going to scrutinize the minutes from the latest Federal

Reserve's Open Market Committee's meeting.