* Benchmark yields climb from 14-month lows
* Safe-haven bids persist on worries about Ukraine,
* Investors prepare for $67 bln August U.S. refunding
By Richard Leong
NEW YORK, Aug 11 (Reuters) - U.S. government debt yields edged higher on Monday from their recent lows as traders trimmed safe-haven bond holdings and stepped back into stocks on hopes of reduced tensions in the Middle East.
Benchmark 10-year yields retraced from last week’s 14-month lows on a 72-hour truce between Israelis and Palestinians as both sides sought to end their month-old war in Gaza.
U.S. airstrikes in Iraq aimed at curbing Islamic State militants who have taken over large swaths of that country also pared safe-haven bids for Treasuries.
“We have been largely driven by geopolitical events despite improving domestic (economic) data,” said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co in New York.
In spite of developments that could eventually end the violence in Gaza and Iraq, investors remained nervous about the fighting in Ukraine and how soured relations between Russia and the West might hurt the global economy.
Benchmark yields held just above their 14-month lows following comments by Fed Vice Chairman Stanley Fischer, who said earlier on Monday that the United States’ subpar recovery since the financial crisis has stemmed from a variety of factors, including declining productivity and sluggish global demand.
Traders perceived his speech at a conference in Sweden as implying that the U.S. central bank would not increase interest rates until the second half of 2015 at the earliest.
On below-average volume, the yield on U.S. 10-year Treasuries notes was last 2.431 percent, up 1.6 basis points on the day. On Friday, it fell to 2.349 percent, a level not seen since June 2013.
Wall Street share prices opened higher, with the Standard & Poor’s 500 index last up 0.45 percent.
On the supply front, the U.S. Treasury Department will begin its $67 billion refunding later this week, which is estimated to raise $9.3 billion in cash for the federal government.
The Treasury will sell $27 billion of three-year debt on Tuesday ; $24 billion in 10-year notes on Wednesday and $16 billion of 30-year bonds on Thursday.
In the “when-issued” market, the upcoming three-year note issue due August 2017 was quoted to sell at a yield of 0.9250 percent, which would be the lowest in four months.
Separately, the Fed will not buy Treasuries on Monday. It will resume its purchases on Tuesday with a planned $950 million to $1.15 billion in bonds due in 2036 to 2044. (Reporting by Richard Leong; Editing by Jonathan Oatis)