Euro zone yields trade at 17-year highs as oil prices rise again

LONDON, Sept. 15 (Reuters) - Benchmark euro zone borrowing costs reached their highest in 17 years on Tuesday as conflict in the Middle East kept oil prices elevated and after the all-important U.S. 10-year Treasury yield rose above 5%, a level not seen since 2007.

Germany's 10-year bond yield DE10YT=RR, the benchmark for the bloc, was last up 2 basis points at 3.547%, just below Monday's peak of 3.554%, which was the highest since mid-2009. Yields rise as prices fall.

Bond yields, which dictate the cost of new borrowing for governments, have hit multi-year or even multi-decade highs around the world in recent weeks.

Shorter-dated euro zone bonds, which reflect bets on the European Central Bank rate outlook, slipped back on Tuesday but remained close to their highest since the rate-hiking cycle of 2023.

Germany's 2-year bond yield DE2YT=RR was down 2 bps at 3.257%, after rising above 3.31% on Monday, the highest in three years.