TREASURIES-Prices pare losses after tame April CPI

NEW YORK, May 14 (Reuters) - U.S. government debt prices regained some ground on Wednesday, paring earlier losses as a smaller-than-expected April rise in the Consumer Price Index somewhat soothed market worries about surging inflation.

Benchmark 10-year notes <US10YT=RR> were last down 2/32 in price for a yield of 3.92 percent. Prior to the CPI data, they were down 12/32 for a 3.96 percent yield.

The tame consumer inflation data briefly revived expectations of the Federal Reserve cutting interest rates by a quarter percentage point at its June policy meeting.

Interest rate futures trimmed losses fleetingly with nearby contracts showing a 10 percent chance of a rate cut in June, up from 6 percent shortly before the data.

But rate futures still suggested that the Fed would raise the benchmark federal funds rate by a quarter point by year end to 2.25 percent.

(Reporting by Richard Leong, Editing by Chizu Nomiyama)