* Oil swings near six-week highs on renewed Gulf woes

* Bond yields elevated as inflation concerns mount

* Rate-hike bets intact as price pressures loom

By Jiaxing Li

HONG KONG, July 21 (Reuters) - The U.S. dollar hovered near

a one-week high on Tuesday, with markets torn between

conflicting Middle East signals, as hostilities in the region

stoked renewed fears over energy supplies while hopes for a

ceasefire offered some relief.

Against the yen, the dollar was largely flat at 162.49 yen. The

euro was little changed at $1.1417, while the British pound was

roughly 0.1% firmer at $1.3441 after Britain's new Prime

Minister Andy Burnham vowed to stick to fiscal rules.

The U.S. dollar index, which measures the currency against a

basket of six peers, was steady at 100.93, after touching its

highest level since July 15 in previous session.

Markets remained hostage to Middle East tensions, with oil

prices seeing a sharp swing to near six-week highs before

retreating. Yemen's Iran-aligned Houthis declared a naval

blockade on Saudi Arabia, raising threats to global energy

supplies, while hopes of de-escalation persisted after Tehran

received a 10-day ceasefire proposal from mediators.

"There is the hope for easing in a little bit of tensions

and we'll hit a pause button at some stage. It's all still very

volatile," Rodrigo Catril, senior currency strategist at

National Australia Bank, said in a podcast.

"We have to wait and see how it develops. We need to see

whether this escalates."

INFLATION RISKS LOOM LARGE

U.S. Treasury yields crept back up as traders weighed whether a

renewed jump in oil prices, driven by the widening war with

Iran, would eventually feed through to consumer prices.

The benchmark 10-year Treasury yield remained elevated at

4.5938%, while yields on 30-year Treasuries were firmly above

the 5% mark.

Recent reports on U.S. inflation and labor market conditions

have caused markets to sharply curb expectations for a Federal

Reserve rate hike next week, with the implied probability now at

just 17%. However, chances of a hike at the September meeting

have risen to 63%, according to CME FedWatch.

A European Central Bank survey showed on Monday that euro zone

firms expect selling prices to rise more moderately. The ECB is

expected to keep rates unchanged this week but high oil prices

are fuelling bets for another hike in the 2.25% deposit rate in

September.

Japan's benchmark bond yields also rose sharply on Tuesday as

war-linked inflation pressures mount, with investors now looking

ahead to the Bank of Japan's meeting next week to see if there

will be any suggestion of an acceleration in the pace of rate

hikes.

"The combination of higher crude and refined product prices,

if sustained, will add to pressure on goods inflation and create

the risk of larger policy rate increases than we already

forecast," analysts at Eastspring Investments said in a note.

The New Zealand dollar was 0.4% stronger at $0.5864, hitting its

highest level since early June, after strong inflation data

reinforced expectations of further rate hikes. The Australian

dollar was a touch stronger at $0.7001.

Elsewhere, the Canadian dollar steadied after dropping

to a one-month low, after the United States imposed a new tariff

of 50% on a wide range of Canadian products in response to what

it called Ottawa's "discriminatory treatment".

(Reporting by Jiaxing Li in Hong Kong; Editing by Shri

Navaratnam and Lincoln Feast.)