TREASURIES-Bonds ease as debt auction, Fed statement loom

* Stock market optimism erodes bonds' safe-haven allure

* Investors looking ahead to Fed policy statement

* Treasury will auction $40 billion of five-year notes

NEW YORK, Sept 23 - U.S. Treasury debt prices eased on Wednesday as stock market optimism undermined the safe-haven appeal of government debt while investors waited for the Federal Reserve's policy statement in the afternoon.

Also bright on the radar is the Treasury's auction of $40 billion of five-year notes in the afternoon.

While the sale of $43 billion of two-year notes on Tuesday met solid demand, worries persisted that Wednesday's auction may not go as well, especially as it is set for shortly before the release of the Fed statement.

Of key interest is whether the Fed -- the U.S. central bank -- will make any suggestion it is mulling steps to wind down emergency measures to support the financial industry now that there are some hints of improvement in the economy.

The auction "is also the focus, as lackluster demand could result due to uncertainty surrounding the Federal Open Market Committee decision," said Thomas di Galoma, head of fixed income rates trading at Guggenheim Capital Markets in New York.

Benchmark 10-year notes were trading 9/32 lower in price to yield 3.48 percent, up from 3.45 percent late on Tuesday, while the two-year note was 1/32 lower to yield 1.04 percent from 0.96 percent.

Having a Treasury auction on the same day as a Fed policy statement is not an especially common event, but with trillions of dollars of new debt to be issued such sales have been growing in size and become more frequent.

However, not everyone expected the combination of the two events to be a problem for U.S. Treasuries trade.

"Having an auction on the same day as the Fed meeting could result in some interesting trading patterns," said George Goncalves, head of fixed income rates strategy at Cantor Fitzgerald in New York.

"However if there was any real concern over a change in Fed policy before the FOMC, let alone a major change in language, the two-year auction would not have gone over so well yesterday."

Thirty-year Treasury bonds were trading 16/32 lower in price to yield 4.23 percent, up from 4.20 percent late on Tuesday, while the five-year note was 5/32 lower to yield 2.46 percent from 2.42 percent.