German bond yields dip, remain close to multi-year highs

LONDON, May 14 (Reuters) - Germany's 10-year bond yield was slightly lower on Thursday but remained close to its recent multi-year peak as higher energy prices solidified expectations for faster inflation and rate hikes from the European Central Bank. Investors were keeping a close eye on events in Beijing, with the U.S.-Israeli war with Iran looming large over U.S. President Donald Trump's visit to China.

Expectations for a lasting peace deal between the U.S. and Iran have faded this week, keeping the Strait of Hormuz effectively closed to maritime traffic. Trump is expected to ask China's President Xi Jinping to help end the costly war, although just prior to his trip he was saying he needed no such help.

Commerzbank rates strategist Hauke Siem?en said an easing in the oil price late on Wednesday was likely to support euro zone bonds on Thursday morning, especially with many European investors away for the Ascension Day holiday.

Germany's 10-year yield, the benchmark for the euro zone bloc, was last down 2.5 basis points (bps) at 3.082%. It remained close to the 3.133% level touched at the end of April, its highest since mid-2011.

Germany's monetary policy-sensitive two-year bond yield was down 3.5 bps on Thursday at 2.682% but has risen almost 70 bps since the outbreak of the war in late February. (Reporting by Samuel Indyk; Editing by Hugh Lawson)