SHANGHAI, May 18 (Reuters) - China's yuan slipped to a near two-week low against the dollar on Monday, reflecting broad greenback strength in global markets after fresh signs of Middle East tensions drove investors into risk-off mode.

The stronger dollar and higher Treasury yields were also underpinned by rising inflationary pressures, which have raised investor bets that the Federal Reserve could raise interest rates later this year. FEDWATCH

A drone strike caused a fire at a nuclear power plant in the United Arab Emirates, officials there said on Sunday, while Saudi Arabia reported intercepting three drones, as U.S. President Donald Trump warned that Iran must act "fast" after efforts to end the U.S.-Israeli war on Iran appeared to have stalled.

And market sentiment was further dented after data showed that China's growth lost momentum in April, with industrial output and retail sales both sharply undershooting expectations as the world's second-biggest economy wrestled with higher energy costs from the Iran war and persistently weak domestic demand.

"Market focus shifted back to (U.S.) inflation, with rising expectations of interest rate hikes driving up U.S. Treasury yields," analysts at Nanhua Futures said in a note.

"Global liquidity tightened marginally, putting pressure on risk assets."

The onshore yuan CNY=CFXS eased to a low of 6.8195 per dollar in morning trading, the weakest level since May 6, before changing hands at 6.8153 at 0354 GMT.

Its offshore counterpart CNH=D3 tracked the weakness and slipped to 6.8171 per dollar at 0354 GMT.

Before the market opened, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.8435 per dollar, 349 pips weaker than a Reuters estimate CNY=RTRS of 6.8086. The spot yuan is allowed to trade 2% either side of a fixed midpoint each day.

Separately, Sino-U.S. relations remained a key market focus. China and the U.S. have agreed to expand agricultural trade through tariff reductions and tackle non-tariff barriers and market access issues, China's commerce ministry said on Saturday after last week's summit in Beijing.

"The meeting outcome was constructive in tone but light on concrete deliverables, leaving room for a 'buy-the-rumour, sell-the-fact' adjustment after an extended offshore yuan rally," said Christopher Wong, FX strategist at OCBC Bank.

"Overall, the latest rebound (in the dollar-yuan pair) reinforces our view that the PBOC is likely to favour a gradual and measured pace of yuan appreciation, rather than a one-way move."

LEVELS AT 0354 GMT:

INSTRUMENT	CURRENT vs USD	UP/DOWN(-) VS. PREVIOUS CLOSE %	% CHANGE YR-TO-DATE	DAY'S HIGH	DAY'S LOW
Spot yuan CNY=CFXS	6.8153	-0.07	2.62	6.8133	6.8195
Offshore yuan spot CNH=D3	6.8173	-0.04	2.34	6.8142	6.8216