TREASURIES OUTLOOK-U.S. yields drift higher after Senate vote on tax bill

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* Senate votes to advance U.S. tax bill

* North Korea launches missile test near Japan

* U.S. consumer confidence soars to 17-year high

NEW YORK, Nov 28 (Reuters) - U.S. Treasury yields inched higher on Tuesday, as risk appetite improved with Wall Street shares hitting record highs after upbeat consumer confidence data and a Senate panel vote to advance a U.S. tax bill.

The full Senate is expected to begin debating the tax bill and vote on it sometime this week. The House of Representatives has already approved its own version of tax-cut legislation. The two versions would need to be reconciled before a measure could go to Trump for his signature.

"That vote was previously penciled in for Thursday, assuming all went according to plan. Looks like this may be behind the late rebound in stocks, yields and the dollar," said Action Economics.

The yield curve also steepened after hitting its flattest in a decade, in what analysts viewed as a much-needed reprieve from months of flattening.

The yield curve has been on a flattening trend for most of the year, as investors priced in an interest rate hike by the Federal Reserve in December and a few more in 2018.

"We see a steepening as a well-needed respite from the torrid pace of flattening we've witnessed in the last few weeks," said Ian Lyngen, head of U.S. rates strategy, at BMO Capital Markets in New York.

The gap between U.S. two-year note and U.S. 10-year note yields widened slightly on Tuesday to 57.90 basis points , after contracting to the tightest since October 2007 on Monday.

The difference between five-year and 30-year yields rose to as much as 72.80 basis points, the widest in a week. The gap was last at 69.80 basis points.

Treasury yields earlier ticked higher after data showed a surge in U.S. consumer confidence to a 17-year high. Inflation expectations, however, slipped again to 4.5 percent and are currently at the bottom of their recent range.

In late trading, the 10-year Treasury yield was up at 2.336 percent, from 2.328 percent late on Monday.

U.S. two-year yields, which climbed to a nine-year peak last week, were at 1.754 percent from 1.745 percent on Monday.

U.S. 30-year bond yields were up slightly at 2.766 percent from Monday's 2.765 percent.

Yields briefly fell after news North Korea launched a missile that landed close to Japan on Wednesday, the first since a missile fired over its neighbor in mid-September. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith Mazzilli and Chris Reese)