TREASURIES-US yields rise as markets react to Middle East conflict

June 13 (Reuters) - U.S. Treasury yields rose Friday afternoon, on track to snap a four-day losing streak after Israel's strike on Iran shocked markets, pushing oil prices higher and pressuring stocks.

Israel struck Iranian targets on Friday for a second night in what it said was a move to block Tehran from developing nuclear weapons.

The attack on multiple targets sparked a surge in oil prices and rekindled inflation concerns, which overshadowed economic and trade news earlier in the week that boosted demand for U.S. sovereign debt and pushed yields lower.

Consumer data from the University of Michigan also showed an unexpectedly large jump in sentiment and expectations. However, markets appeared to show little interest in light of the unfolding violence in the Middle East.

Earlier in the week, yields had fallen on cooler-than-expected consumer inflation data, reported progress in reaching a detente in U.S.-China trade relations and signs of deepening weakness in the U.S. labor market.

Robert Tipp, chief investment strategist and head of global bonds at PGIM Fixed Income, said that rather than a typical flight to safety in U.S. sovereign debt, the rising yields instead pointed to markets better positioned to absorb an outburst of violence in the Middle East.

When Iraqi leader Saddam Hussein invaded Kuwait in 1990, for example, the United States was in recession and oil supplies were tighter, he said.

"But when you're in a world that's already seen a fair amount of geopolitical and military activity in that region and elsewhere, and the economy's on a fairly good footing with a good oil supply, the market is less susceptible," said Tipp.

Investors in the coming week will turn their eyes to the next policy announcement from the Federal Reserve, but futures currently predict the central bank will not cut rates before September.

The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB was last up 6.7 basis points to 4.424%, nevertheless leaving it down about 8 basis points for the week.

The yield on the 30-year bond US30YT=TWEB rose 7.2 basis points to 4.915%, down about 4 basis points since the prior week.

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 46.4 basis points.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations, rose 5 basis points to 3.956%, leaving it down nearly 14 basis points for the week -- the biggest weekly decline since mid-April.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=TWEB was last at 2.320% after closing at 2.284% on June 12.

The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.294%, indicating the market sees inflation averaging about 2.3% a year for the next decade.