GLOBAL MARKETS-Stocks dip, Treasury yields pull-back amid Middle East tension, cooler inflation, US-China 'deal'

By Lawrence Delevingne and Lawrence White

June 11 (Reuters) - Wall Street stocks and the dollar fell on Wednesday, while U.S. Treasury yields eased, amid fresh tension in the Middle East, a lack of detail in a U.S.-China trade deal, and U.S. consumer prices showing only a mild increase.

The U.S. is preparing a partial evacuation of its embassy in Iraq and will allow military dependents to leave locations around the Middle East due to heightened security risks in the region, U.S. and Iraqi sources said on Wednesday. Oil prices rose more than 4% to their highest in more than two months, with Brent crude futures settled at $69.77 a barrel. O/R

Earlier in the day, U.S. President Donald Trump said a deal getting the fragile truce in the U.S.-China trade war back on track was done after negotiators from Washington and Beijing agreed on a framework covering tariff rates. The deal also removes Chinese export restrictions on rare earth minerals and allows Chinese students access to American universities.

The latest trade truce offered investors hope that the two superpowers can reach a lasting resolution and prevent further market disruption, but the absence of detailed terms leaves room for potential future tariff conflicts.

Separately, the Consumer Price Index (CPI) increased 0.1% in May amid cheaper gasoline after rising 0.2% in April, the U.S. Labor Department said on Wednesday, but inflation is expected to accelerate in the coming months on the back of the Trump administration's import tariffs.

For U.S. stocks, the Dow Jones Industrial Average .DJI finished a day of choppy trading little changed, while the S&P 500 .SPX fell 0.27%, and the Nasdaq Composite .IXIC lost 0.5%.

Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, said there were still plenty of risks in equities, such as additional trade negotiations, rising inflation and growth slowing noticeably. There are "still plenty of potential downside triggers out there," he wrote in an email.

Asian shares were slightly more positive, with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS up about 0.7%, while the STOXX benchmark for major European shares .STOXX closed 0.3% lower.

DOLLAR DOWN, TREASURY YIELDS EASE

The U.S. dollar slid against most major currencies, with the dollar index down about 0.3% to 98.6 =USD. The dollar weakened slightly against the Japanese yen to trade at 144.6 JPY=EBS, while the euro edged up 0.5% to $1.148 EUR=EBS.

Ten-year Treasury yields US10YT=TWEB fell 5.8 basis points to 4.416% as the U.S. Treasury Department saw strong interest in a $39 billion sale of 10-year notes on Wednesday, indicating that demand for the debt remains strong despite concerns that foreign investors are moving away from the market.

Concerns about huge U.S. budget deficits and debt have combined with unease over the White House's shifting policies to make investors demand a higher term premium for holding Treasuries.

Traders of short-term interest-rate futures now price in a 70% chance of a quarter-point reduction in the Fed policy rate by September, compared with 57% earlier. Policymakers are widely expected to keep rates unchanged next week. 0#USDIRPR.

"The longer-term inflation challenge they pose remains," Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, wrote in an email. "Given the Fed likely shares that outlook, no one should be looking for rate cuts in the near future."

Gold gained 0.76% to $3,347 an ounce XAU=. GOL/