NEW YORK, Jan 22 (Reuters) - U.S. Treasury yields fell on Monday as investors took advantage of a recent decline in bond prices to enter the market ahead of economic indicators later this week that may give new information on the direction of interest rates.

Treasuries were also tracking European bonds, said Tom di Galoma, managing director and co-head of global rates trading at BTIG.

"That's just pulling us down a bit," he said. "We started to see lower yields in U.S. Treasuries and I think it's really just a function of European rates falling," he said.

After a sharp rally in bonds at the end of last year, Treasury yields, which move inversely to prices, rose sharply last week as central bank officials pushed back against market expectations that the Federal Reserve will cut interest rates soon as inflation cools.

A string of economic indicators last week showed resilience in economic activity despite high interest rates, suggesting the Fed's shift to a less restrictive posture may not be imminent.

Monday's lower yields are the result of "a retracement of what we saw last week, when we got a bit of a push-back against the market rally that we saw late last year," said Jonathan Mondillo, head of North American fixed income at abrdn.

"Portfolio managers have cash to put to work, and a nice parking position is Treasury bonds," he said.

Benchmark 10-year Treasury yields were down six basis points at 4.091%, but still up more than 20 basis points from their close of 3.86% on the last trading day of 2023.

Two-year yields, which more closely reflect market expectations on changes in interest rates, were down three basis points at 4.376%.

The curve comparing the two maturities - which has been inverted since July 2022 - was flatter, or more inverted, at minus 28.8 basis points. An inversion of that curve, which occurs when short-term bonds yield more than longer ones, is closely monitored by investors because it has reliably preceded recessions.

Investors later this week will be watching gross domestic product data, as well as jobs and inflation data.

The Treasury will sell $60 billion in two-year notes on Tuesday, $61 billion of five-year notes on Wednesday and $41 billion on seven-year notes on Thursday.

(Reporting by Davide Barbuscia and Herbert Lash; Editing by Kirsten Donovan)