TREASURIES-Treasuries rebound as oil prices ease, technicals attract buyers

* Treasury yields retreat as oil prices drop and technical support attracts buyers

* Inflation concerns persist after strong U.S. producer price data and Middle East conflict

* Retail sales rise, jobless claims steady, Xi warns Trump on Taiwan tensions

By Karen Brettell

NEW YORK, May 14 (Reuters) - Benchmark 10-year Treasury yields pulled back from an 11-month high on Thursday, as U.S. government debt found support from falling oil prices and buying interest at key technical levels. Yields had surged on Wednesday after data showed U.S. producer prices jumped in April by their largest margin in four years, driven by soaring costs for goods and services - the latest sign of accelerating inflation tied to the ongoing war with Iran.

The data stoked concerns that elevated inflation may soon feed through to core consumer prices, which the Fed closely monitors when setting monetary policy.

"In that pipeline from high commodity prices to consumers, the PPI is the penultimate step," said Will Compernolle, macro strategist at FHN Financial.

Energy disruptions from the Middle East conflict have kept oil prices elevated, with no indication the war is nearing a resolution. Oil prices eased on Thursday, however, after Iran's state media reported that around 30 vessels had crossed the Strait of Hormuz in recent hours, and the semi-official Fars news agency cited a source saying Iran had begun allowing transit for some Chinese ships.

Treasuries also steadied after 10- and 30-year yields hit their highest levels since mid-2025, attracting buyers at key technical support levels, Compernolle noted.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1.9 basis points to 3.971%.

The yield on benchmark U.S. 10-year notes fell 3 basis points to 4.447%, after reaching 4.50% on Wednesday.

The yield curve between 2- and 10-year notes flattened to 47.5 basis points. Elsewhere, U.S. retail sales rose further in April, though some of the gain likely reflected higher prices rather than stronger demand. Jobless claims edged up modestly last week, suggesting the labor market remains stable. On the diplomatic front, Chinese President Xi Jinping told President Donald Trump that trade talks were making progress at the opening of a two-day summit, but warned that unresolved tensions over Taiwan could push relations in a dangerous direction and potentially lead to conflict.

(Reporting by Karen Brettell Editing by Nick Zieminski)