(Updates prices, adds comment, changes byline)
* Treasury prices rebound, yields dip
* Yellen defends Fed policy before House, sticks to accommodative stance
* Geopolitical tensions prevent sell-off
NEW YORK, July 16 (Reuters) - U.S. benchmark Treasury yields edged lower on Wednesday, slipping back from an early boost delivered after data suggesting the world's largest economy is on solid footing.
Higher-than-expected June producer price index data was balanced against data showing a lower-than-expected increase in June industrial production.
"As depressing as it is, we're not responding one way or the other to data. Prices are high and you have the Fed nicely priced in," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.
"The Fed has been dovish and Yellen has given us a bit of an outline. We're priced 18 months from now to the information we have vis-a-vis the Fed today," Ader said.
Earlier, Federal Reserve Chair Janet Yellen spoke before the House of Representatives Financial Services Committee, repeating largely what she told the Senate Banking Committee on Tuesday.
Yellen stood by her view that accommodative U.S. monetary policy is still needed even though the economy is recovering.
Benchmark 10-year U.S. Treasuries were up 4/32 of a point in price, pushing the yield down to 2.53 percent in afternoon New York trade. The 30-year U.S. Treasury bond was up 13/32, bringing the yield down to 3.34 percent.
The Labor Department said on Wednesday its producer price index increased 0.4 percent, reversing May's 0.2 percent decline. Economists polled by Reuters had forecast prices received by the nation's farms, factories and refineries rising 0.2 percent.
U.S. industrial output also increased 0.2 percent in June, while U.S. homebuilder sentiment rose in July to a six-month high, further evidence the economy was improving steadily.
There was some support for Treasuries coming from investor concerns over tensions in the Middle East and uncertainty surrounding Portugal's largest listed bank, Banco Espirito Santo .
Israel on Wednesday urged the evacuation of several Gaza Strip areas which are home to more than 100,000 people, threatening ground operations after briefly holding fire under an Egyptian truce proposal that failed to stop Palestinian rocket salvoes. 1/8ID;nL6N0PR0TR 3/8
Portuguese bond yields fell on Wednesday, with investors more optimistic that BES can deal with the financial troubles faced by its founding family, but uncertainty remained high with respect to the Portuguese bank.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by James Dalgleish)