(Adds details, analyst comment, updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 12 (Reuters) - U.S. Treasury yields spiked

on Wednesday after inflation in the world's largest economy came

in stronger than expected last month, suggesting the Federal

Reserve will likely pause its rate-cutting cycle for an extended

period.

Data showed the consumer price index (CPI) rose 3% on an

annual basis in January compared with the 2.9% increase expected

by economists polled by Reuters. On a monthly basis, the index

gained 0.5%, exceeding consensus estimates for a 0.3% increase.

"Today's stronger-than-expected CPI release is likely to

further cement the FOMC's (Federal Open Market Committee)

cautious approach to easing," said Whitney Watson, global

co-head and co-chief investment officer of fixed income and

liquidity solutions, at Goldman Sachs Asset Management, in

emailed comments.

"A resilient labor market also provides scope for patience.

We think the Fed is likely to remain in 'wait and see mode' for

the time being and anticipate the Fed staying on hold at next

month's meeting."

In early trading, the benchmark 10-year bounced 9.4 basis

points to 4.631% after earlier hitting a roughly

three-week high of 4.643%.

At the short end of the curve, the two-year yield, which

tracks policy moves by the Fed, gained 7.7 bps to 4.365%

. Earlier in the session, it hit its highest since

mid-January of 4.389%.

Following the data, the U.S. rate futures market priced in

just 27.5 bps of easing this year, with the first rate reduction

now seen at the September Fed policy meeting. Futures traders

had for many weeks priced in more than an even chance of easing

in June.