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* U.S. 2020 growth falls, but Q4 GDP rises * U.S. yield curve steepens * U.S. 10-year breakeven inflation back above 2% * Investors look to U.S. 7-year note auction (Adds comment, details; updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Jan 28 (Reuters) - U.S. long-dated Treasury yields rallied from three-week lows on Thursday, tracking the stock market's recovery, after growth data for the world's largest economy was not as weak as initially feared, while initial weekly jobless claims were lower than forecast. Analysts also said there was a bit of "concession" in the market ahead of a 7-year note auction later on Thursday. Investors tend to sell Treasuries ahead of an auction to push yields higher so they can buy them at a lower price in a move called supply concession. U.S. 10-year, 20-year, and 30-year yields were lower before the economic data and were last higher on the day. That steepened the yield curve after it flattened over the last four sessions. The spread between U.S. two-year and 10-year yields widened to 92.40 basis points. U.S. gross domestic product grew at a 4% annualized rate in the fourth quarter of last year, in line with economists' forecasts, although for the whole of 2020, it contracted 3.5%, the worst performance since 1946. Investors looked past the contraction and focused instead on a possible economic recovery this year with additional fiscal stimulus and vaccine distribution. "What we have seen recently is kind of a pause in the selling pressure in the market with some of the headlines changing. As we came into the new year with the results of the Georgia Senate run-off, the market started pricing in the reflation trade," said Kevin Flanagan, head of fixed income strategy at WisdomTree Asset Management. "I don't think that's gone away. But often times you'll see it's two steps forward, one step back. I still think the trend for this year is the rising 10-year Treasury yield," he added. Paul Ashworth, chief U.S. economist at Capital Economics, in a research note, said although GDP for 2020 showed contraction, it suggested a faster recovery than many expected, given how dire last year had been. He sees GDP growth as high as 6.5% this year, "with effective vaccines offering the possibility of a return to normalcy later this year and the Biden administration intent on more fiscal stimulus." Other reports showed U.S. jobless claims were lower than expected at 847,000, compared with forecasts of 875,000. In late morning trading, the U.S. benchmark 10-year yield rose to 1.044%, from 1.014% late on Wednesday. It earlier fell below 1%, a three-week trough. U.S. 30-year yields rose to 1.801% from Wednesday's 1.78%, after earlier sliding to a three-week low of 1.755%. U.S. two-year yields were up at 0.121%, from 0.119% on Wednesday. The break-even inflation rate on 10-year Treasury Inflation Protected Securities, meanwhile, a gauge of expected annual inflation over the next 10 years, rose to 2.03%, after dropping below 2% on Wednesday for the first time since late December. Ahead of the auction of 7-year notes, their yield rose to 0.731%, from 0.706% on Wednesday. January 28 Thursday 11:08AM New York / 1608 GMT Price Current Net Yield % Change (bps) Three-month bills 0.065 0.0659 -0.005 Six-month bills 0.08 0.0811 0.002 Two-year note 100-2/256 0.1211 0.002 Three-year note 99-208/256 0.1885 0.010 Five-year note 99-188/256 0.4288 0.022 Seven-year note 99-64/256 0.7364 0.030 10-year note 98-104/256 1.0466 0.033 20-year bond 95-240/256 1.6156 0.032 30-year bond 95-220/256 1.8053 0.025 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.25 -0.25 spread U.S. 3-year dollar swap 7.50 -0.25 spread U.S. 5-year dollar swap 9.25 0.00 spread U.S. 10-year dollar swap 3.75 0.00 spread U.S. 30-year dollar swap -25.00 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Sinead Carew; Editing by Andrea Ricci and Dan Grebler)