TREASURIES-10-year slips as stocks rise on Fannie comments

NEW YORK, May 6 (Reuters) - The price of U.S. 10-year Treasury notes dipped on Tuesday, erasing earlier gains, as reassuring comments from Fannie Mae sent the stock market higher and dimmed bonds' safe-haven appeal.

Company executives were cautiously optimistic that the worst of the credit market turmoil erupting from the real estate slump may have passed. That triggered a big rally in Fannie Mae shares and supported a wider advance in U.S. stocks. For more, see [ID:nN06483354]

Earlier, Fannie Mae announced its third straight quarterly loss, renewing worries about more problems in the credit and housing markets.

The benchmark 10-year note's price was down 2/32 at 96-29/32, well below its earlier high of 97-17/32. The 10-year yield <US10YT=RR>, which moves inversely with the price, was 3.88 percent, up slightly from 3.87 percent late Monday.

(Reporting by Richard Leong, Editing by Chizu Nomiyama)