* Saudi Arabia launches $17.5 billion global bond deal * U.S. single-family housing starts jump in September * Traders await clues from ECB on bond purchase program (Recasts with updated market action; adds quote) By Richard Leong NEW YORK, Oct 19 (Reuters) - U.S. Treasury yields rose on Wednesday as dealers sold government bonds to hedge Saudi Arabia's first-ever global bond issue of $17.5 billion.

Saudi's multi-part debt offering drew heavy investor demand as the world's top oil exporter sought to borrow at historic low yields.

Bond dealers typically sell Treasuries to hedge against an issue they underwrite and then buy them back after it is sold.

"It's a huge deal. There's some rate-lock selling," said Mary Ann Hurley, vice president of fixed income with D.A. Davidson in Seattle. "As the Saudi deal gets put away, you could see some reversal of that rate-lock selling." Benchmark U.S. 10-year Treasury notes were last down 1/32 in price for a yield of 1.754 percent, up 0.6 basis point from late on Tuesday. The 10-year yield remained below a four-month peak of 1.841 percent reached on Monday.

The rise in yields was also spurred by data that showed domestic single-family home construction rising 8 percent to its strongest level in seven months in September, which revived some optimism about the housing sector.

The jump in single-family housing activity helped to offset a 38 percent plunge in apartment construction that knocked overall groundbreaking last month to its weakest level in 1-1/2 years.

Meanwhile, investors are awaiting possible clues on the European Central Bank's thinking on its 1 trillion-plus euro bond purchase program which may conclude as early as March 2017.

Traders have been speculating whether the ECB, which will hold a policy meeting on Thursday, would consider paring its quantitative easing as Europe continues to struggle with weak growth and faces Britain's exit from the European Union.

"The market has come to realize central banks have pretty much done all they can to help markets," Hurley said. "Still the ECB will maintain its accommodative stance." October 19 Wednesday 9:54AM New York / 1354 GMT Price US T BONDS DEC6 164-6/32 -0-3/32 10YR TNotes DEC6 130-72/256 -0-4/256 Price Current Net Yield % Change (bps) Three-month bills 0.335 0.3399 -0.008 Six-month bills 0.4675 0.4751 -0.005 Two-year note 99-228/256 0.8068 -0.004 Three-year note 100-28/256 0.9627 0.000 Five-year note 99-120/256 1.236 0.000 Seven-year note 98-240/256 1.5368 0.003 10-year note 97-184/256 1.7538 0.006 30-year bond 94-100/256 2.5186 0.007 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 22.75 0.25 spread U.S. 3-year dollar swap 14.00 0.00 spread U.S. 5-year dollar swap 1.50 0.00 spread U.S. 10-year dollar swap -17.50 -0.50 spread U.S. 30-year dollar swap -57.50 -0.50 spread (Reporting by Richard Leong; Editing by Chizu Nomiyama)