LONDON, April 28 (Reuters) - Germany's 10-year yield

nudged up to a two-week high on Tuesday as the Strait of Hormuz

remained effectively shut and oil prices climbed, leaving

investors positioning for a longer-lasting period of weak growth

and high inflation.

The Bund yield, the euro zone benchmark, rose two basis

points to 3.06% its highest since April 14. While it

is still below the 3.13% hit in late March before the U.S. and

Iran agreed a ceasefire, it has been ticking steadily higher in

recent sessions.

Germany's two-year yield rose a similar amount to 2.59%.

Hopes for resolution to the two-month U.S. and Israeli war

on Iran that has disrupted energy supplies and fuelled inflation

were dampened after a U.S official said President Donald Trump

is unhappy with the latest Iranian proposal to end the war.

That pushed Brent crude futures for June higher for

a seventh day to $111.3 a barrel, up nearly 3% on the day,

underscoring worries the surge in energy prices will spill over

and cause a broader climb in prices and force central banks to

raise rates.

The European Central Bank meets on Thursday. While it is not

expected to hike interest rates at this meeting, investors will

be watching closely for any signals about how policymakers view

the outlook for the euro zone economy.

Markets currently see the ECB as more likely than not to

tighten policy by June, and are effectively fully pricing in two

25 bp rate hikes by September.

The Bank of Japan kept rates unchanged on Tuesday but struck

a hawkish tone, sending 10 year Japanese government bond yields

up towards a 29-year peak.