(Updated at 2:27 p.m. ET/1827 GMT)

By Chuck Mikolajczak

NEW YORK, July 25 (Reuters) -

Longer-dated U.S. Treasury yields were mostly lower on

Thursday after a Wednesday tumble in equities helped fuel a

safe-haven bid for bonds, while a solid reading on economic

growth failed to shift expectations for a rate cut from the

Federal Reserve.

Yields initially pared declines after the Commerce

Department's advance report on second-quarter gross domestic

product

grew at

a 2.8% annualized rate, above the 2.0% rise forecast by

economists polled by Reuters and stronger than the 1.4% rate in

the first quarter. In addition, the data showed inflation

pressures eased, giving the Fed a cushion to

cut rates this year

as the market widely expects.

Other data showed weekly initial jobless

claims fell

more than expected to 235,000 compared with the 238,000

forecast, indicating a cooling but still solid labor market.

"The bond market is being pretty resilient because that was

a hot GDP print," said Jay Hatfield, CEO at Infrastructure

Capital Advisors in New York.

"We're setting up for a Goldilocks-type situation where

we feared that the housing sector is really rolling over and

that might cause GDP to go to at least zero, but that doesn't

seem like it's going to happen and then the Fed will finally

cut, late, but still cut."

The yield on the benchmark U.S. 10-year Treasury note

fell 2.8 basis points to 4.258%.

The U.S. stock market sold off sharply on Wednesday, as

drops in Google parent Alphabet and Tesla,

two megacap names that have helped lift the stock market to

record highs, sparked a broader selloff in the wake of their

earnings reports.

But equities recovered on Thursday,

led by

a rally in small cap stocks.

The yield on the 30-year bond declined 4.9 basis

points to 4.5%.

The Fed is scheduled to hold its next policy meeting at the

end of July. Markets see only a slight chance for a rate cut of

at least 25 basis points (bps) at that meeting, but are fully

pricing in a September cut, according to CME's FedWatch Tool.

A closely watched part of the U.S. Treasury yield curve

measuring the gap between yields on two- and 10-year Treasury

notes, seen as an indicator of economic

expectations, was at a negative 18.5 basis points after

steepening to a negative 11.3, its least inverted since Oct. 23.

An inversion of this part of the curve is widely viewed as a

reliable signal that a recession is likely in one to two years,

although some analysts have noted the move out of inversion may

be a better indicator of an oncoming recession.

In a reversal from Wednesday's trading, shorter-duration

yields were higher, with the two-year U.S. Treasury

yield, which typically moves in step with interest rate

expectations, up 2.5 basis points to 4.441%.

An auction of $44 billion in seven-year notes

was seen

as solid

by analysts, with a high yield of 4.162% and demand at 2.64

times the notes on sale.

The breakeven rate on five-year U.S. Treasury

Inflation-Protected Securities (TIPS) was last at

2.17% after closing at 2.169% on July 24.

The 10-year TIPS breakeven rate was last at

2.265%, indicating the market sees inflation averaging about

2.3% a year for the next decade.