* Dovish Fed minutes underpin demand for U.S. bonds
* Benchmark yields on track to fall 5th straight session
* Two-year yield retreats further from 10-month high
* Yellen's testimony before Congress next week seen key
NEW YORK, July 11 U.S. Treasuries prices rose on Friday, with benchmark yields hovering at their lowest in five weeks, on safe-haven demand stemming from intensified fighting in the Middle East and worries about problems at Portugal's biggest listed bank.
Appetite for Treasuries has also been stoked by the minutes of the U.S. Federal Reserve's June policy meeting released on Wednesday, which hinted that the central bank is likely to cling to its near zero interest rate policy until the second half of 2015.
Benchmark yields were on track to fall for a fifth straight session, matching a streak last seen in March, as anxious investors scrambled for low-risk bonds and unloaded equities, knocking stock indexes from record highs.
"People don't want to be short bonds going into the weekend with the situation in Portugal and the geopolitical concerns in the Middle East," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co in New York.
Worries that Banco Espirito Santo's problems may kindle another banking crisis in Europe receded a tad after the Portuguese bank released a statement that said it had adequate capital to protect against any losses. The bank has been under scrutiny due to its link to a web of companies in the Espirito Santo business empire.
Meanwhile, Israeli air strikes continued for a fourth day on the Gaza Strip, stoking worries about tension spreading to the rest of the region.
These overseas developments have overshadowed upbeat news on the U.S. economy, analysts and traders said.
Despite last week's strong June payrolls reading, the 10-year yield has declined nearly 13 basis points this week, while two-yield has retreated from a 10-month high set on Tuesday.
While bidding on this week's $61 billion in fixed-rate government debt was relatively weak, traders say appetite for Treasuries should remain solid as they are yielding more than their European and Japanese counterparts.
"There is demand for long-dated U.S. paper because there's not so much high-quality supply out there," Milstein added.
Looking ahead, traders await more clues on when the U.S. central bank will raise interest rates when Fed Chair Janet Yellen is scheduled to testify on the economy before Congress next Tuesday and Wednesday.
On the open market, benchmark 10-year Treasuries were up 3/32 in price with a yield of 2.523 percent, down 1 basis point from late on Thursday.
The 30-year bond was 10/32 higher in price, yielding 3.348 percent, down nearly 2 basis points from Thursday, while the two-year note was yielding 0.448 percent, down 1 basis point on the day. (Reporting by Richard Leong; Editing by Peter Galloway)