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By Gertrude Chavez-Dreyfuss NEW YORK, July 29 (Reuters) - U.S. Treasury yields edged higher in choppy trading on Thursday, although were below their peaks for the day as strong earnings, positive Chinese news and solid European economic reports balanced weaker-than-expected U.S. data. The advance estimate for U.S. gross domestic product in the second quarter showed that the economy grew at a 6.5% annualized rate, lower than the market forecast for an 8.5% rise. "File this one under solid rather than stellar. Pre-release hype had suggested that America's economy might be growing nearly as quickly as it did during last autumn's gravity-defying bounceback," said James Bentley, director of Financial Markets Online. "But as the initial disappointment fades from the second quarter's below expectation print, cooler heads are still seeing many reasons to be cheerful....The second quarter's 6.5% expansion rate is impressive by any yardstick and is even more laudable when you remember that it was not turbocharged by Federal stimulus in the way the first quarter's numbers were," he added. In a separate report, U.S. initial jobless claims were at 400,000 for the latest week, higher than consensus expectations of 380,000. U.S. stocks, however, looked past softer-than-forecast U.S. data, with the Dow and S&P 500 hitting fresh intraday record highs early Thursday due in part to a slate of strong corporate earnings reports. In midmorning trading, the U.S. 10-year Treasury yield was up a little at 1.269% from 1.263% late on Wednesday. U.S. 30-year yields were little changed at 1.914% from Wednesday's 1.911%. Also on Thursday, the Treasury is selling $62 billion in 7-year notes. Ahead of the auction, U.S. 7-year note yields were flat at 1.024%, from Wednesday's 1.02%. Risk appetite on Thursday improved, with Chinese shares higher, including a 10% bounce in tech giant Tencent - its second biggest in nearly a decade - after reports that regulators had called banks overnight to ease concerns about the recent crackdown on sectors like tech and education, and on overseas listings. Adding to a more positive global risk sentiment were strong European economic reports. Data showed euro zone investor sentiment reached a record high and state-level data hinted that German inflation would exceed expectations, pushing European yields higher July 29 Thursday 10:16AM New York/1416 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0475 0.0482 -0.003 Six-month bills 0.0525 0.0532 0.002 Two-year note 99-214/256 0.2075 -0.003 Three-year note 100 0.375 -0.011 Five-year note 99-118/256 0.7351 -0.005 Seven-year note 101-124/256 1.0271 0.007 10-year note 103-68/256 1.2693 0.006 20-year bond 106-216/256 1.836 0.005 30-year bond 110-104/256 1.915 0.004 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.00 -0.50 spread U.S. 3-year dollar swap 11.50 0.00 spread U.S. 5-year dollar swap 8.75 0.75 spread U.S. 10-year dollar swap 2.75 0.75 spread U.S. 30-year dollar swap -24.00 1.50 spread (Reporting by Gertrude Chavez-Dreyfuss)