TREASURIES-US yields rise after hotter than expected producer price data

Aug 14 (Reuters) - U.S. Treasury yields rose on Thursday after data showed that producer prices rose in July more than economists had expected.

Core producer prices rose 0.9% last month for an annual gain of 3.7%. Economists polled by Reuters had projected a 0.2% monthly gain, and an annual increase of 2.9%.

The 2-year note US2YT=RR yield, which typically moves in step with Fed interest rate expectations, was last up 0.6 basis points on the day at 3.693%. The yield on benchmark U.S. 10-year notes US10YT=RR fell 0.7 basis points to 4.233%, but is up from around 4.205% before the data.