TREASURIES-Short-dated U.S. yields climb on inflation data

* U.S (Other OTC: UBGXF - news) . yield curve flattens in scramble for longer-dated debt

* Core CPI posts biggest rise in 4-1/2 years in January

* CPI (Other OTC: CPICQ - news) data revive bets on possible rate hikes in 2016 (Adds quote, updates market action)

By Richard Leong

NEW YORK, Feb 19 (Reuters) - Yields on shorter-dated U.S. Treasury debt rose on Friday as a stronger-than-expected report on consumer prices in January kindled bets the Federal Reserve may raise interest rates swifter than some traders had anticipated.

Losses on Wall Street and a renewed drop in oil prices also revived some safehaven demand for longer-dated U.S. government debt, pushing 30-year Treasury yield to its lowest in a week, analysts said.

"Now (Other OTC: NWPN - news) the risk is that inflation may be rising faster than previously thought. The market has pulled in rate hike expectations a bit back into 2016," said Gennadiy Goldberg, interest rate strategist at TD Securities in New York.

Two-year Treasury notes, which are the most sensitive to traders' view on Fed policy, fell 2/32 in price to yield 0.746 percent, up over 3 basis points from Thursday. Two-year yield booked a weekly gain of 5 basis points for the week.

U.S. benchmark 10-year Treasury notes were up 3/32 in price to yield 1.748 percent, down 1 basis point from Thursday and little changed on the week.

The Labor Department said on Friday its Consumer Price Index, excluding the volatile food and energy prices, rose 0.3 percent last month, faster than the 0.2 percent forecast of analysts polled by Reuters. The CPI core rate saw its biggest gain since August 2011.

Fed policy-makers have raised concerns that underlying inflation has continued to fall short of its annual 2 percent goal due to a strong dollar and weak commodity prices.

The core rate on personal consumption expenditure, the Fed's preferred inflation gauge, was up 1.4 percent in December from a year ago.

Global market (LSE: 125875.L - news) turmoil has compounded the risks to a modest U.S. economic expansion, causing some top Fed officials to reconsider the pace of planned rate increases.

"While the data have been a mixed bag, fears of a recession have been overblown," said Jennifer Vail, head of fixed income research at U.S. Bank Wealth Management in Portland, Oregon.

As the January CPI report revived bets on rate hikes later this year, traders scooped up longer-dated Treasuries on the view they would offer higher returns than shorter-dated issues.

These "curve-flattening" bets narrowed the yield premium of 30-year bonds over five-year notes to 1.38 percentage points, its smallest in over three weeks.

"We are still somewhat cautious on the short-end of the curve," said Scott Zaleski, portfolio manager at Standish Mellon Asset Management in Boston. (Editing by Bernadette Baum and Lisa Shumaker)