(Recasts with Fed statement, adds auction result, updates prices)
* Fed sees rate hike warranted "soon"
* Turkish fears boosts safety bid for U.S. bonds
* Treasury sells $36 bln five-year notes
By Karen Brettell
NEW YORK, May 23 (Reuters) - U.S. Treasury yields held at lower levels on Wednesday after minutes of the Federal Reserve's May meeting showed that most Fed policymakers thought it likely another interest rate increase would be warranted "soon" if the U.S. economic outlook remains intact.
The minutes also included a call by some policymakers to revise the Fed's monetary policy statement soon to reflect that rates would be close or above long-run estimates before too long.
Benchmark 10-year note yields held around the 3.02 percent level where they had traded before the minutes, down from 3.054 percent on Tuesday and from an almost seven-year high of 3.128 percent on Friday.
Investors are looking for any indications that the U.S. central bank wll raise rates three more times this year.
"I don’t think we got anything in the statement that’s going to confirm a fourth hike for this year," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York.
Two additional hikes are widely expected.
Treasury prices had gained earlier on Wednesday as concerns about the tumbling Turkish lira boosted demand for low-risk debt.
The lira dropped more than 5 percent to a record low, before reversing course after Turkey's central bank raised interest rates by 300 basis points in an emergency move to put a floor under the plunging currency.
The U.S. government sold 5-year notes at a high yield of 2.864 on Wednesday, near where they had traded before the auction, the second sale of $99 billion in coupon-bearing supply this week.
Dealers took a larger than usual share for the second day, however, reflecting that the market is struggling to absorb larger auction sizes.
The Treasury has been increasing the size of its auctions because the government faces higher debt needs due to its growing deficit and spending increases, and because it needs to make up for declining purchases by the Federal Reserve.
The U.S. sold $33 billion in 2-year notes on Tuesday and will sell $30 billion in 7-year notes on Thursday. (Reporting by Karen Brettell; editing by Jonathan Oatis and Diane Craft) )