(Updated in New York morning time)

By Karen Brettell

March 12 (Reuters) - U.S. Treasury yields rose on

Wednesday as concerns over the potentially inflationary impact

of a global trade war offset optimism over slowing consumer

price gains, after data showed that prices rose less than

expected in February.

Some underlying components of the data that feed through to

personal consumption expenditures, the Federal Reserve's

preferred inflation measure, were also higher than expected.

"This is the last reading not impacted by tariff distortions

so to some extent the market's a little bit hesitant to over

react to a better print," said Gennadiy Goldberg, head of U.S.

rates strategy at TD Securities in New York. Also, "the

transmission to PCE is actually a little bit stronger."

The consumer price index rose 0.2% last month after

accelerating 0.5% in January. Excluding the volatile food and

energy components, the CPI climbed 0.2% in February after

gaining 0.4% in January.

U.S. President Donald Trump's increased tariffs on all U.S.

steel and aluminum imports took effect on Wednesday, stepping up

a campaign to reorder global trade in favor of the U.S. and

drawing swift retaliation from Canada and Europe.

Meanwhile a bond market rally that last week sent benchmark

10-year yields to their lowest levels since October is also seen

as potentially played out for the near-term.

"The market's already rallied quite a bit over the last

couple of weeks. There is a little bit of hesitation about

pushing rates too far lower in advance of a lot of the

uncertainty that's coming," Goldberg said.

The yield on benchmark U.S. 10-year notes was

last up 3.4 basis points on the day at 4.322%. The 2-year note

yield rose 5 basis points to 3.991%.

The yield curve between two-year and 10-year notes

flattened by around one basis point to 32 basis

points.