TREASURIES-Yield curve at steepest point in two months

* Yield curve steepens on global central bank policy

* ECB, BOJ seen as less supportive of long-term debt

* Retail sales, inflation data in focus this week

By Karen Brettell

NEW YORK, Sept 14 (Reuters) - U.S. Treasury yield curve rose

to its steepest levels in more than two months on Wednesday,

although bond weakness ebbed after a dramatic selloff on Tuesday

sent long-dated yields to three-month highs.

Long-dated bonds have underperformed in the past month in

line with a steepening yield curve in Japanese government bonds.

The Bank of Japan is studying options to steepen the yield curve

to help prompt new lending by banks that have been hurt by low

long-term rates.

Less dovish comments last Thursday by European Central Bank

President Mario Draghi have sparked rapid selling in stocks and

bonds alike as investors worry that global central banks are

facing fewer options as they attempt to stimulate growth and

inflation.

"The whole thing started with Japan and the idea that

they're not going to be buying as much long-term debt as they

were," said Lou Brien, a market strategist at DRW Trading in

Chicago. "Then you can go to Draghi  that piled onto the

thinking about Japan."

At the same time, dovish comments from Federal Reserve

Governor Lael Brainard on Monday further reduced expectations

that the U.S. central bank will raise interest rates when it

meets next week.

That has helped weaken long bonds on the expectation that

the Fed may stay lower for longer, which is likely to generate

higher growth and inflation longer term.

The gap (NYSE: GPS - news) between five-year note yields and 30-year bond

yields widened as far as 123.40 basis points on

Wednesday, the steepest level since July 1.

Benchmark 10-year notes were last up 5/32 in

price to yield 1.72 percent, down from 1.73 percent on Tuesday.

Bonds had little reaction to data on Wednesday that showed

that U.S. import prices fell for the first time in six months in

August on declining petroleum and food costs, pointing to a tame

inflation environment that could encourage the Federal Reserve

to keep interest rates steady next week.

U.S. retail sales data on Thursday and consumer inflation

data on Friday will be watched for signs of when the Federal

Reserve is likely to raise rates.

(Editing by Bill Trott)