TREASURIES-US yields continue slide after worsening labor data

June 12 (Reuters) - U.S. Treasury yields on Thursday were lower for fourth straight session as markets absorbed economic data pointing to a worsening labor market and a moderate uptick in wholesale inflation.

A $22 billion auction of 30-year bonds US30YT=RR also revealed strong demand, helping allay concerns that foreign investors could shift away from the U.S. market over the expanding federal deficit. A Wednesday auction of 10-year Treasuries likewise pointed to healthy uptake from buyers.

According to the Labor Department, total insured unemployment, or all people receiving benefits, overshot expectations to rise to 1.956 million workers, the highest level in nearly four years.

Meanwhile the annual reading of the Producer Price Index ticked one tenth higher to 2.6%, in line with expectations, even though a closely watched "core" reading, which the excludes volatile food and fuel categories, was cooler than the prior month's print.

Lou Brien, market strategist at DRW Trading, said he investors likely were reacting to labor market weakness and believed consumer price increases from President Donald Trump's trade wars were in the pipeline even if they had yet to materialize.

"There are many details in the labor market that have shown weakness for a long time," he said. "I think the move higher in the continuing claims and the weekly claims is starting to confirm some of that weakness."

"We're still anticipating there's gonna be some kind of a jump in prices. We keep thinking that month after month and nothing happens but I don't think that thought has left the market."

Chinese authorities on Thursday affirmed a trade deal reached this week with Washington, though specifics remain unclear.

In Thursday's 30-year auction, bonds sold at a high yield of 4.844%, more than a basis point below where the market put the yield at the close of bidding. Overall demand was 2.43 times the amount of debt on offer, in line with its recent average.

"It was a very, very solid auction," said Jan Nevruzi, U.S. rates strategist at TD Securities in New York. "The end user demand was pretty high, above recent averages, and it stopped through after a pretty substantial rally on the day."

The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB was last down 5.3 basis points to 4.361%. The yield on the 30-year bond US30YT=TWEB fell 6.3 basis points to 4.846%.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=TWEB, seen as an indicator of economic expectations, was at a positive 44.7 basis points.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations, fell 3.3 basis points to 3.912%.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=TWEB was last at 2.295% after closing at 2.313% on June 11.

The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.274%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

The U.S. dollar 5 years forward inflation-linked swap USIL5YF5Y=R, seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed's quantitative easing, was last at 2.433%.