TREASURIES-US bonds slump on strong data, uncertain talks with Iran

* Iran undecided whether to hold talks with US

* Trump says does not want to extend ceasefire

* Retail sales beat forecasts, boost Treasury yields

* Fed Chair nominee Warsh seeks regime change at US central bank (Adds analyst comment, Warsh hearing, updates yields)

By Gertrude Chavez-Dreyfuss

NEW YORK, April 21 (Reuters) - U.S. Treasuries slid for a second straight session on Tuesday, as investors grew nervous about a fragile U.S.-Iran ceasefire that is set to end on Wednesday, with no clear indication that talks to resolve the conflict between the two countries would push through in Pakistan.

They also fell after data showed retail sales increased more than expected in March, reinforcing expectations that the Federal Reserve will hold interest rates steady this year.

The war on Iran, however, remains a key focus for the bond market.

Iran said on Tuesday it had still yet to decide whether to attend the talks with the United States, after U.S. forces boarded a huge Iranian oil tanker at sea with just a day left before the ceasefire runs out in the war in the Gulf. Vice President JD Vance, due to lead the U.S. delegation, had yet to board a flight for Islamabad.

President Donald Trump said he hoped to reach a "great deal" to end the war, but he did not want to extend the ceasefire, and said the U.S. military was "raring to go" if negotiations were not successful.

U.S. crude futures rose after the news that Iran is still considering holding talks on the conflict. They were last up 2.8% at $92.10 per barrel, dragging Treasury yields higher as well.

In afternoon trading, the benchmark 10-year yield, which moves inversely to prices, was last up 3.8 basis points at 4.288%. U.S. 30-year yields drifted higher as well, up 1.4 bps at 4.895%.

On the shorter end of the curve, U.S. two-year yields, which reflect interest rate expectations, rose 6.3 bps to 3.779% .

"The activity today in the Treasuries market is war-related and it's consistent with the price of oil. As soon as oil turned around, you started to get the yields backing up again," said Noel Dixon, senior macro strategist, at State Street, Boston.

The increase in oil prices is likely to fuel inflation, pressuring bond prices and reducing portfolio returns.

RETAIL SALES, WARSH HEARING

U.S. yields drifted higher after a report showed that U.S. retail sales jumped 1.7% last month after an upwardly revised 0.7% gain in February. Economists polled by Reuters had forecast retail sales rising 1.4%. The war in Iran boosted gasoline prices and receipts at service stations, while tax refunds supported spending elsewhere, the report suggested.

Tom Simons, chief U.S. economist at Jefferies, wrote in a note after the data that he had expected that the headline retail sales number "would be gaudy due to the increase in gas prices and a pickup in unit auto sales," but he was surprised by the strength in other components as well.

"There is no evidence here that higher gasoline prices have motivated the consumer to tighten the belt elsewhere just yet," he noted.

A separate report showed that contracts to purchase previously owned U.S. homes increased more than expected in March. The pending home sales index rose 1.5% last month to 73.7, the National Association of Realtors said on Tuesday.

Economists polled by Reuters had forecast contracts, which become sales after a month or two, increasing 0.5%.

Following the data, U.S. rate futures showed about 10 bps of easing this year, down from 14 bps late on Monday, significantly lower than the more than 50 bps priced in before the Iran war, according to LSEG estimates.

The decline in rate cut odds was also reflected in the yield curve, which flattened for a second straight session. The gap between two-year and 10-year yields narrowed to 50.6 bps , compared with 52.5 bps late Monday.

The curve showed a bear flattening move where shorter-dated yields are rising faster than those on longer-term bonds, suggesting that the market does not expect the Fed to cut interest rates anytime soon.

Against a picture of economic resilience, attention quickly turned to Capitol Hill, where Fed Chair nominee Kevin Warsh, appeared before the Senate Banking Committee and called for a regime change at the U.S. central bank, including a new approach for controlling inflation.

He also vowed to preserve the Fed's independence.

"I do not believe the operational independence of monetary policy is particularly threatened when elected officials - presidents, senators, or members of the House (of Representatives) - state their views on interest rates," said Warsh, who served as a Fed governor from 2006 to 2011. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrew Heavens and Keith Weir)