* ECB stays put on rates, avoids dramatic action * Bank of England holds back on more stimulus * U.S. jobless claims unexpectedly fall By Luciana Lopez NEW YORK, March 7 (Reuters) - Prices for U.S. Treasuries dropped on Thursday as a second straight day of better-than-expected labor market data raised hopes the world's largest economy was building momentum. The number of Americans filing initial claims for unemployment benefits unexpectedly fell to a seasonally adjusted 340,000 last week, suggesting a pick-up in the labor market recovery. "This is not a sign of a slowly growing economy," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York. Still, he said, "the bond market remains focused, to the extent it trades at all with the 800 pound gorilla of Fed QE (quantitative easing) on its back, on the unemployment rate." Traders are unlikely to take big risks ahead of tomorrow's nonfarm payrolls report, he said. Benchmark 10-year Treasury notes slipped 8/32 in price to yield 1.967 percent, from 1.9427 percent on Wednesday. Prices for 30-year bonds dropped 16/32 to yield 3.179 percent, from 3.1557 percent late Wednesday. A payrolls processor report on Wednesday showed a larger-than-expected 198,000 jobs added by U.S. private employers in February. The combination of private payrolls figures and jobless claims boosted hopes that Friday's Labor Department payrolls report will show more jobs than expected added in February. That report is key because the Fed wants to see an unemployment rate around 6.5 percent - still a good way from the current 7.9 percent. Analysts in a Reuters poll, however, see the jobless rate unchanged last month. The Fed's support has helped fuel global appetite for riskier assets, with the bank buying $85 billion per month of mortgage-backed securities and Treasuries through the year. Other central banks on Thursday proved cautious about changing their policy stance. The European Central Bank kept interest rates steady on Thursday and avoided dramatic action to help Italy or other euro zone countries, despite the threat of political turmoil in Rome reigniting the bloc's debt crisis. ECB chief Mario Draghi said price risks were "broadly balanced" and noted risks of weaker growth. Those comments helped offset the selling of Treasuries, said Ian Lyngen, a senior government bond strategist with CRT Capital Group Llc in Stamford, Connecticut. In addition, the Bank of England decided not to restart its main stimulus program for Britain's ailing economy as the government stuck to its deficit-cutting pledge and said the BoE should support growth.