LONDON, May 14 (Reuters) - Germany's 10-year bond yield

was slightly lower on Thursday but remained close to its recent

multi-year peak as higher energy prices solidified expectations

for faster inflation and rate hikes from the European Central

Bank.

Investors were keeping a close eye on events in Beijing, with

the U.S.-Israeli war with Iran looming large over U.S. President

Donald Trump's visit to China.

Expectations for a lasting peace deal between the U.S. and

Iran have faded this week, keeping the Strait of Hormuz

effectively closed to maritime traffic. Trump is expected to ask

China's President Xi Jinping to help end the costly war,

although just prior to his trip he was saying he needed no such

help.

Commerzbank rates strategist Hauke Siemßen said an easing in

the oil price late on Wednesday was likely to support euro zone

bonds on Thursday morning, especially with many European

investors away for the Ascension Day holiday.

Germany's 10-year yield, the benchmark for the

euro zone bloc, was last down 2.5 basis points (bps) at 3.082%.

It remained close to the 3.133% level touched at the end of

April, its highest since mid-2011.

Germany's monetary policy-sensitive two-year bond yield

was down 3.5 bps on Thursday at 2.682% but has risen

almost 70 bps since the outbreak of the war in late February.