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* Dearth of U.S. economic data puts focus on geopolitics
* Global tension seen capping yields
By Gertrude Chavez-Dreyfuss
NEW YORK, July 23 (Reuters) - U.S. long-term Treasury debt prices ended slightly lower on Wednesday in thin trading, but their near-term outlook remained positive on safe-haven demand as global tensions in the Middle East and Ukraine persisted.
Buying in Treasuries held steady for most of the session and kept yields -- which move inversely with bond prices -- in check following Tuesday's benign U.S. consumer inflation number. For some strategists, the tame CPI data suggested that the Federal Reserve is not in a hurry to raise interest rates.
A large $2.774 billion buyback from the New York Federal Reserve of U.S. Treasuries maturing August 2022 through May 2024 as part of its economic stimulus program, also helped keep a lid on yields.
But with no major U.S. economic data, the market focused squarely on the ongoing conflict in the Middle East and Ukraine.
"We would expect geopolitical risks to put downward pressure on yields," said Jennifer Vail, head of fixed income research at U.S. Bank Wealth Management in Portland, Oregon.
She noted that U.S. Bank has reduced its year-end forecast for the U.S. 10-year note yield to 3.2 percent, 20 basis points lower than its original estimate due to the ongoing geopolitical events.
Tension increased in Ukraine as pro-Russian rebels shot down on Wednesday two Ukrainian fighter jets, and the missiles that brought them down might have been fired from Russia.
In the Middle East, meanwhile, Gaza fighting raged on Wednesday, displacing thousands more Palestinians in the battered territory, even as American aviation authorities extended a ban on U.S. flights to Tel Aviv for a second day, spooked by rocket salvoes out of the Gaza Strip.
In afternoon trading, benchmark 10-year U.S. Treasury notes were little changed in price, yielding 2.465 percent, while the 30-year Treasury bond was down 4/32 in price, pushing the yield up to 3.259 percent. On Monday U.S. 30-year Treasury bond yields fell to their lowest since June 2013.
Many strategists have made a big deal about Tuesday's tame CPI reading, which suggested that the Fed will keep interest rates low for longer.
U.S. Bank's Vail disagreed with this view, saying the U.S. economy is no longer in a disinflationary environment.
"We're at a level where we're seeing a healthy improvement in inflation. Is it going to surpass the Fed target any time soon? Probably not," said Vail. "But I don't think inflation would be the primary driver in the change in interest rate policy."
Thierry Albert Wizman, interest rates and currencies strategist at Macquarie in New York, echoed Vail's sentiment.
He said U.S. annualized core inflation is actually trending higher, with averages of 1.6 percent in the fourth quarter of 2013, 1.8 percent in the first quarter this year, and 2.6 percent in the second quarter. (Reporting by Gertrude Chavez-Dreyfuss; Editing by James Dalgleish and Diane Craft)