* Analysts downplayed the modest gain in bonds as a resurgence in flight-to-quality trade. Investors have been reluctant to push benchmark 10-year note yields below 3.2 pct after touching a three-month low of 3.14 percent last week, LPL Financial market strategist Anthony Valeri said.

* S&P e-mini futures were down 0.27 percent, while MSCI Asia-Pacific ex-Japan index was up 0.14 percent.

* Investors are still struggling to assess the disruption to output from the March 11 earthquake and tsunami which have left nearly 23,000 people dead or missing. Sony said on Tuesday it was cutting output at five more plants and Toyota Motor said it was delaying restarting assembly lines.

* June T-note futures were up 4/32 at 120-5/32 from Tuesday's close on moderate volume after testing support at 120 for a second day.

* Benchmark 10-year cash Treasury notes were up 2/32 in price to yield 3.32 percent, down from 3.33 percent at Tuesday's close. The 10-year yield is above the three-month low of 3.14 percent posted last week and below the high of 3.77 percent in early February.

* LPL's Valeri said 3.2 percent is a key chart level for the 10-year yield because it was the bottom of a Treasury yield range from late 2009 through early 2010. If the 10-year yield retests 3.2 percent and stays below that level, it will likely make a run toward 3.0 percent.

However, in the absence of a double-dip recession or an extension of the Federal Reserve's QE2 bond purchase program, such a move is "highly unlikely, we do not believe the 10-year Treasury yield will dip below 3.0 pct meaning that total return upside for Treasuries is limited," Valeri writes in a research note.

* Separately, 10-year Treasury Inflation-Protected Securities underperformed regular 10-year government debt for a second day, as investors are making room for $11 billion 10-year TIPS supply on Thursday. The spread between 10-year TIPS and 10-year regular 10-year notes shrank to 2.34 percent from 2.30 percent late on Tuesday.

* On the data front, traders and analysts will receive February figures on new home sales after an industry report released on Monday showed a 9.6 percent drop in home resales last month, the biggest percentage drop since July. Analysts polled by Reuters predicted new homes sold at an annualized rate of 290,000 units, compared with a 280,000 unit annualized rate in January.