Foreign demand weakens at US Treasury auctions in March in midst of Middle East war

NEW YORK, April 9 (Reuters) - Foreign investors bought fewer two-, five-, and seven-year U.S. Treasury notes at last month's auction than in February, as conflict raged in the Middle East, data from the U.S. Treasury Department released on Wednesday showed.

Foreign buyers purchased $6.024 billion of the latest two-year notes in March, about half the $13.190 billion bought in the previous month. They also took $9.167 billion of five-year notes, down 28% from $12.648 billion in February.

Overseas investors took in $6.976 billion of seven-year debt in March, versus $10.547 billion the prior month.

Overall, the Treasury offered $76 billion in two-year notes, $77 billion in five-year debt, and $49 billion in seven-year securities.

Auction allotment data also showed large investment managers bought $44.320 billion of two-year notes, down from $48.093 billion in February.

These investment managers took in $48.188 billion of five-year notes, up slightly from $47.652 billion in the February auction. They also absorbed $30.360 billion in seven-year debt versus $28.099 billion the prior month.

In the Treasury Inflation-Protected Securities (TIPS) market, the Treasury offered $21 billion in 10-year TIPS. Investment funds bought $15.454 billion of that supply, 5% more than at the previous auction.

Foreign investors, however, purchased $1.747 billion, a 44% decline from the prior sale. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Kirsten Donovan)