* U.S. shutdown seen hurting economy, delaying Fed tapering * One-month T-bill yields rise on debt ceiling fears * Fed buys $3.15 billion of notes due 2021-2023 * Treasury to sell $64 billion in 3-, 10- and 30-year debt this week By Ellen Freilich and Karen Brettell NEW YORK, Oct 7 (Reuters) - U.S. Treasuries prices rose on Monday as the lack of progress on ending a partial government shutdown heightened concerns about economic growth and a potential stalemate over raising the country's $16.7 trillion debt ceiling. The government moved into the second week of a shutdown on Monday with no end in sight. Many U.S. economic data releases, including the monthly payrolls report scheduled for last Friday, have been delayed by the shutdown. "The uncertainty in Washington is the clearest touchstone for the push toward Treasuries prices going higher; obviously the longer that the government is shut down, the more damaging it potentially becomes for the economy," said CRT Capital senior government bond strategist Ian Lyngen, in Stamford, Connecticut. Stock market losses also enhanced the lure of safe-haven U.S. debt, but most U.S. Treasuries were only slightly higher amid losses for Wall Street stocks. "It's just a holding pattern, waiting for any signs of progress on the shutdown or debt ceiling issues," said John Canavan, fixed income analyst at Stone & McCarthy Research Associates in Princeton, New Jersey. More dramatic market moves could be in store "if we get into late October with no resolution," Canavan said. Treasury Secretary Jacob Lew has warned Congress that as of October 17, the United States will have only about $30 billion in cash on hand under its current $16.7 trillion debt ceiling. "If October 17 passes with no resolution in sight you'll see a more significant breakdown in equities and a safe-haven bid for Treasuries," Canavan said. "Right now markets might be a little too sanguine about prospects for a resolution," he added. Investors are also focused on the release on Wednesday of minutes from last month's Federal Reserve policy meeting, which could reveal more about why the U.S. central bank surprised markets by deciding not to begin reducing its $85 billion a month bond-purchase program. The longer the shutdown lasts, the less likely the Fed is to reduce its bond purchases, especially since the shutdown has deprived the central bank of data on what is happening in the economy. "The longer this goes on, the weaker the economic data will be, and that will probably push a tapering of quantitative easing further out, from 2013 to 2014," said Gary Pollack, head of fixed income trading at Deutsche Bank Private Wealth Management in New York. Benchmark 10-year notes were last up 4/32 in price to yield 2.64 percent, down from 2.65 percent late on Friday. Yields have dropped from 3.00 percent, the highest in over two years, on Sept. 6. Squabbling over raising the country's debt ceiling was also hurting riskier assets such as stocks, which may have added a bid to Treasuries. Republican House Speaker John Boehner said on Sunday he would not raise the U.S. debt ceiling without a "serious conversation" about the country's rising debt levels, while Democrats said it was irresponsible and reckless to raise the possibility of a U.S. default. Most market participants see the United States as very unlikely to miss payments on its debt, because a default would likely have severe consequences, disrupting short-term funding and collateralized markets that are backed by Treasuries, and potentially creating broad aversion to U.S. debt that would raise the country's borrowing costs. Some investors are nonetheless avoiding shorter-dated bills that are most at risk of any delay in being repaid, and fears that the increasingly divided Congress will be unable to come to a solution may increase over the coming weeks. One-month Treasury bills are yielding 0.16 percent, higher than three-month and six-month bills, which pay 0.03 percent and 0.04 percent, respectively. The Treasury said on Monday it will sell $30 billion in four-week bills on Tuesday, $5 billion less than its previous four-week sale. Some investors have worried that falling issuance as the debt ceiling deadline approaches may create some shortages of Treasuries collateral to back trades. The Fed bought $3.15 billion in notes due from 2021-2023 on Monday as part of its ongoing purchase program. The Treasury will sell $64 billion in new three-, 10- and 30-year bonds this week.