* Trump urges bailout for airlines, small businesses * U.S. yield curve steepens again * U.S. 10-year note auction shows solid numbers (Adds auction results, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Oct 7 (Reuters) - U.S. Treasury prices fell on Wednesday, as investors took comfort in President Donald Trump"s comments urging Congress to pass an airline bailout deal as well as a stimulus package for small businesses. Bond prices also slid after the market continued to price in a victory for Democratic challenger Joe Biden in next month"s presidential election, and after what analysts described as a decent outcome for the $35 billion U.S. 10-year note auction on Wednesday. The bid-to-cover, a gauge of demand, was at 2.47, which was higher than both the 2.30 for the September auction and the 2.41 for the larger new issue in August. The market is now looking to the $23 billion U.S. 30-year bond sale on Thursday. U.S. yields recovered following a brief fall late Tuesday after Trump said he would suspend stimulus talks until after the election and accused House of Representatives Speaker Nancy Pelosi of not negotiating in good faith. The yield curve also resumed its steepening trend on Wednesday after flattening the previous session. Trump said late on Tuesday Congress should quickly extend $25 billion in new payroll assistance to U.S. passenger airlines furloughing thousands of workers as air travel remains down sharply amid the coronavirus pandemic. In a tweet, Trump also urged Congress to approve the $135 billion payroll protection program for small businesses. "There"s still some potential for relief. Trump"s tweeted on the airline money and the payroll protection program and that"s one reason why we"re seeing some risk-on moves," said Justin Lederer, Treasury trader at Cantor Fitzgerald in New York. "In a larger picture, yes, the stimulus could be delayed but overall it would be ultimately passed. We don"t know what it would look like and it would depend on who wins the election," he added In early afternoon trading, U.S. 10-year yields rose to 0.77%, from 0.74% late on Tuesday. Ten-year yields rose to their highest level since June earlier on Tuesday. Yields on U.S. 30-year bonds were at 1.571%, up from 1.537% the previous session. Earlier on Tuesday 30-year yields climbed to a four-month peak. The yield curve steepened on Wednesday as well, with the spread between the 10-year and two-year widening to 61.70 basis points. A steeper curve suggests expectations of higher growth and inflation. Biden"s widening lead in the polls over Trump less than a month before the election and the possibility of a Democratic sweep in Congress have helped the steepening narrative. A victory for Biden and a Democratic sweep in Congress would mean higher fiscal spending and more Treasury supply. "The idea of a Biden win and a Democratic sweep has helped steepen the curve. The Biden platform in terms of actual spending is going to be much bigger than what Trump is offering," said Rob Robis, chief global fixed income strategist, at BCA Research. October 7 Wednesday 1:27PM New York / 1727 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0975 0.0989 0.000 Six-month bills 0.11 0.1116 -0.002 Two-year note 99-241/256 0.1547 0.008 Three-year note 99-198/256 0.2008 0.012 Five-year note 99-146/256 0.3371 0.022 Seven-year note 98-212/256 0.5464 0.025 10-year note 98-160/256 0.7702 0.030 20-year bond 96-92/256 1.3343 0.028 30-year bond 95-96/256 1.5696 0.033 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 0.00 spread U.S. 3-year dollar swap 7.25 -0.50 spread U.S. 5-year dollar swap 7.00 0.25 spread U.S. 10-year dollar swap 2.50 0.50 spread U.S. 30-year dollar swap -36.00 1.00 spread (Reporting by Gertrude Chavez-; Editing by Stephen Orlofsky and Richard Chang)