(Adds quotes, data, auction results, updates prices) By Karen Brettell NEW YORK, Aug 19 (Reuters) - U.S. Treasury yields fell on Thursday as risk appetite worsened on concerns about the spread of COVID variants, and a day after the Federal Reserve said it expects to begin paring bond purchases this year. A rise in cases of the Delta variant is adding to fears that the economy will not recover as quickly as hoped and weighing on consumer confidence. “I think for the most part what we are seeing now is a reaction to concerns about the Delta variant (and) the after effects of that sort of shocking consumer sentiment report that we got this past Friday,” said Kevin Flanagan, head of fixed income strategy at WisdomTree. Data on Friday showed that U.S. consumer sentiment dropped in early August to its lowest level in a decade as Americans gave faltering outlooks on everything from personal finances to inflation and employment. “The sentiment numbers are lower than at any point during 2020 and appear to be weighing on policymakers as they ponder the timing and composition of QE tapering as we head into the fall,” David Petrosinelli, senior trader at InspereX said in a report on Thursday. Minutes from the Fed’s July meeting released on Wednesday showed that the bulk of the U.S. central bank"s policy-setting committee is coalescing around a plan that would see the Fed start trimming its bond-buying program later this year, though policymakers remained somewhat at odds over how fast to taper the asset purchases. The Taliban’s takeover of Afghanistan this week also creates new geopolitical uncertainties that could alter the Fed’s thinking. “The geopolitical landscape just became more complicated. Should the chaos in Afghanistan persist, the timing of tapering could easily get pushed out past year-end,” Petrosinelli said. Benchmark 10-year yields dipped three basis points to 1.245%. They fell to 1.127% earlier this month, which was the lowest since February. Investors will be watching a speech by Fed Chair Jerome Powell in Jackson Hole next week for any new indications on when the taper will be announced. Data on Thursday showed that the number of Americans filing new claims for unemployment benefits fell to a 17-month low last week, pointing to another month of robust job growth, though surging COVID-19 infections pose a risk to the labor market recovery. A separate report from the Philadelphia Fed Growth showed that growth in factory activity in the U.S. mid-Atlantic region slowed for the fourth consecutive month in August after hitting its highest pace in nearly half a century earlier this spring. The Treasury saw solid demand for an $8 billion sale of 30-year Treasury Inflation-Protected Securities (TIPS), which sold at a high yield of minus 0.292%. August 19 Thursday 3:16PM New York / 1916 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0525 0.0532 -0.008 Six-month bills 0.0475 0.0482 -0.003 Two-year note 99-207/256 0.2236 0.005 Three-year note 99-208/256 0.4383 0.005 Five-year note 99-74/256 0.7718 -0.006 Seven-year note 99-192/256 1.0374 -0.017 10-year note 100-12/256 1.245 -0.028 20-year bond 99-52/256 1.7977 -0.038 30-year bond 102-200/256 1.8783 -0.035 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.25 0.00 spread U.S. 3-year dollar swap 10.00 -0.25 spread U.S. 5-year dollar swap 8.50 0.25 spread U.S. 10-year dollar swap 1.25 0.25 spread U.S. 30-year dollar swap -27.75 0.75 spread (Editing by Barbara Lewis and Cynthia Osterman) Our Standards: The Thomson Reuters Trust Principles.