* Swine flu jitters weigh on stocks, feed safety bid
* Benchmark 10-year yields ease to 2.95 percent
* 2-year notes auction briefly weighs on bond market
NEW YORK, April 27 (Reuters) - U.S. Treasuries rose on Monday as worries about the spread of swine flu fed a bid for safe-haven government debt.
Concern that a spreading virus in more countries presented a new obstacle to economic recovery pushed equities sharply lower in Asia overnight and caused U.S. stock indexes to fall 1 percent, sending investors to U.S. Treasuries.
However, the ranges were small, with the market having to digest a load of supply this week. The market pared gains after a $40 billion auction of 2-year notes but quickly regained its footing.
"The flight to quality is outweighing supply," said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson & Co. in Seattle. "Take that away and I think we would be a lot lower."
Benchmark 10-year Treasury notes were last trading 15/32 higher on the day, pushing yields down to 2.95 percent from 3.0 percent on Friday.
Two-year Treasury notes rose 4/32, pushing their yields down to 0.90 percent from 0.97 percent on Friday. The flu has killed up to 149 people in Mexico and has spread to the United States, Canada and Europe, but those locations did not report any fatalities.
The World Health Organisation said an emergency committee could raise its pandemic alert level to Phase 4 or 5. Phase 4 would mean the virus has shown it can transmit from person to person and cause large outbreaks.
But the organization also said U.S. health officials have taken the first steps toward producing a vaccine against the virus.
This week, the Treasury is selling a record $101 billion in coupon securities. In addition to Monday's 2-year notes, 5- and 7-year securities are on offer in the coming days. (Additional reporting by Ellen Freilich; Editing by Kenneth Barry)