* U.S. 10-year yield hits highest level since Jan. 2014 * U.S. yield curve steepens further from decade flat * U.S. to sell $96 billion in coupon-bearing debt * Long-term inflation gauges rise to highest since 2014 (Updates market action, changes dateline, previous LONDON) By Richard Leong NEW YORK, April 23 (Reuters) - U.S. bond prices fell on Monday, with the 10-year yield hitting its highest in over four years amid worries about the growing supply of government debt and accelerating inflation as oil and commodity prices climb. The U.S. Treasury Department will sell a combined $96 billion in coupon-bearing securities this week, starting with $32 billion in two-year notes on Tuesday. At 9:12 a.m. (1312 GMT), the yield on 10-year Treasury notes was 2.975 percent, up 2 basis points from late on Friday. It touched 2.998 percent earlier Monday, which was the highest since January 2014, Reuters data showed. "There are supply concerns. The auction sizes are getting bigger," said Larry Milstein, head of agency and government trading at R.W. Pressprich & Co. in New York. The Treasury has ramped up its borrowing to fund its operation following last year's massive tax overhaul and a two-year budget agreement reached in February. An expected jump in Treasuries supply is expected to lift long-term borrowing costs, not only for the government but also for consumers. The two-year yield was 2.466 percent, nearly 1 basis point higher on the day after hitting 2.478 percent earlier Monday, which was last seen in September 2008. A further selloff in Treasuries steepened the yield curve from its flattest levels in over a decade set last week. The flattening move partly reflected some anxiety among traders on whether the U.S. economic expansion is running out of steam as expectations of more increases in short-term rates by the Federal Reserve might slow business and consumer spending and investment. Meanwhile, some market gauges of U.S. long-term inflation expectations hit their highest level in at least 3-1/2 years on Monday, Reuters data showed. The U.S. five-year, five-year inflation swap touched 2.5385 percent in early European trade for the first time since November 2014. The 10-year inflation breakeven rate, or the yield gap between 10-year Treasury Inflation Protected Securities and regular 10-year Treasuries, was 2.19 percent, touching its highest level since August 2014, Tradeweb and Reuters data showed. Last week, global oil prices climbed to their highest levels since November 2014 on supply and geopolitical worries, boosting inflation expectations around the world, analysts said. On Monday, U.S. crude futures fell more than 1 percent to $67.39 a barrel. The Federal Reserve's Beige Book of regional economic conditions, released last Wednesday, showed domestic prices grew across the United States in March through early April. April 23 Monday 9:15 AM New York/1315 GMT Price US T BONDS JUN8 142-26/32 -0-9/32 10YR TNotes JUN8 119-92/256 -0-48/256 Price Current Net Yield % Change (bps) Three-month bills 1.7825 1.815 0.008 Six-month bills 1.97 2.0169 0.008 Two-year note 99-152/256 2.4659 0.009 Three-year note 99-70/256 2.6304 0.016 Five-year note 98-144/256 2.8138 0.023 Seven-year note 98-24/256 2.9306 0.026 10-year note 98-24/256 2.9752 0.024 30-year bond 97 3.1559 0.014 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 28.00 -0.25 spread U.S. 3-year dollar swap 21.75 -0.25 spread U.S. 5-year dollar swap 11.00 -0.50 spread U.S. 10-year dollar swap 2.75 -0.50 spread U.S. 30-year dollar swap -13.25 -0.75 spread (Additional reporting by Abhinav Ramnarayan in LONDON Editing by Sujata Rao and Bernadette Baum)