Someanalysts expect Chinese firms to balk at the new benchmark anddemand even bigger price

Someanalysts expect Chinese firms to balk at the new benchmark anddemand even bigger price cuts. Last month, Cliffs reported a first-quarter loss and saidiron ore pellet sales volume slumped 27 percent to 2.0 milliontons, and revenue per ton was down 2 percent at $76.50 The shares of integrated U.S steelmakers rose on Tuesdayafter the announcement. AK Steel closed up 65 cents, or 5percent, at $13.42 on the New York Stock Exchange U.S. SteelCorp (X.N) rose 4.2 percent to $30.73 and ArcelorMittal (MT.N)ended the day 4.9 percent higher at $30.41 Cliffs rose 6percent to $24.55 Locker noted that most integrated U.S steelmakers willonly be affected indirectly. "Only those buying iron ore on aspot basis will be impacted, since most integrated producershave captive mines or buy on contract." He noted Europe-based ArcelorMittal, the world's largeststeelmaker, buys some ore from Cliffs. Bradford said althoughArcelorMittal has about 65 percent of its own iron oreglobally, it has to buy the rest. Michelle Applebaum, an independent steel industry analystin Chicago, said U.S.

Steel's domestic operations arecompletely integrated but the company gets as much income fromits European operations. "Net-net, it's a modest negative for domestic blast furnacecompanies," she said. For electric furnace companies, some useore as a scrap substitute. "But scrap prices have collapsed andthey are already seeing the benefits of that." Applebaum said that according to trade press reports andsteel buyer input, U.S. steelmakers have announced a variety ofprice increases for some beams and other long products rangingfrom $20-$40 per ton, or about 3 percent to 6 percent.

"China is taking the lead at raising steel pricing again,but it tends to be affected by scrap rather than iron ore.There is a big lag too, and this is the first iron oresettlement since September, so .. the cuts were expected," shesaid. Locker said the ore benchmark cuts would likely have "adampening effect on prices going up." (Reporting by Steve James; Editing by Richard Chang and AndreGrenon) Stocks China Japan. NEW YORK (Reuters) - U.S. government debt prices fell sharply on Tuesday after data showing a sharp rebound in consumer confidence sent stocks on a tear, overwhelming positive sentiment from a solid auction of two-year notes. Asian Markets  |  ChinaPart of the selling was due to ongoing supply concerns. The week's first, $40 billion sale, found very strong interest, easing fears about a possible pullback in demand amid record budget deficits.Still, traders worried longer maturities might not receive as strong a welcome.

Total issuance for the week is slated to total $101 billion, matching a record set earlier this year. The next two offerings would be of five- and seven-year debt."It is still in the back of everyone's mind that we've got years of these kind of auctions down the road," said Kim Rupert, head of global fixed-income analysis at Action Economics.Supply issues aside, it was hard to make a case for buying government bonds with the U.S stock market rallying so steeply. The Dow Jones industrial average closed the day nearly 200 points, or 2.37 percent higher.Against that backdrop, benchmark 10-year notes lost 27/32 and were offering a yield of 3.55 percent, up 10 basis points from Friday's close. The 30-year bond was down 1-28/32 and yielding 4.50 percent.The move away from bonds and into equities was driven in part by a sharp jump in The Conference Board's consumer confidence measure. The index surged to 54.9 from 40.8, the biggest one-month rise in six years and the best reading in eight months.Selling by mortgage investors, who are forced to sell Treasuries to sell their positions after yields breach certain key levels, may have exacerbated the downturn in Treasury prices in the afternoon, traders said.The day's auction itself went off without a hitch. It was met with bids for 2.94 times the amount on offer, the strongest showing for a two-year note since September 2007, just a month after the start of a credit crisis.Indirect bidders, often viewed as a proxy for foreign buying, took 54 percent of the sale, the most since late 2006."Great auction, massive indirects" said Andrew Brenner, a senior vice president at MF global, citing talk of a "huge Asian bid."Despite such demand, the selling trend was firmly in place. Not even the Federal Reserve, which through one of its emergency programs has become a buyer of last resort for Treasuries, managed to stem the selling.

The Fed purchased $1.55 billion in inflation-protected notes on Tuesday.Traders sold Treasuries in earnest last week after a Standard & Poor's warning on Britain's AAA rating sparked concern that the U.S. credit profile might eventually suffer a similar fate.Treasury Secretary Timothy Geithner heads for China this weekend, and many expect him to try to assuage a growing anxiety among Chinese officials about their large Treasury holdings.(Additional reporting by Burton Frierson; Editing by Diane Craft)(Reporting by Pedro Nicolaci da Costa) Asian Markets China. MAY 26 MAY 25 MAY 26 MAY 25U.S. 1.537171.54362 IRANIANN/A 14897.50EURO 1.105241.10180 KUWAIT N/A0.44426U.K 0.97191N/A NORWEGIAN9.893069.76419AUSTRALIA1.969221.97622 S.