European stocks steady, set for weekly loss as oil prices, yields stay elevated

Aug 21 (Reuters) - European shares were little changed and headed for a weekly decline on Friday as pressure in global bond markets weighed, while a diplomatic deadlock in the Gulf pushed oil prices higher and stoked inflation concerns.

The pan-European STOXX 600 was up 0.06% at 650.79 points as of 0705 GMT and on track for a second straight weekly decline.

U.S. Treasury yields resumed their upward march after Wednesday's Treasury intervention provided only fleeting support to the battered bond market.

The rise came even after U.S. Treasury Secretary Scott Bessent said the government could increase Treasury buybacks and raised the prospect of fiscal consolidation.

Basic resources led sectoral gains, rising 1.3% as a softer dollar lifted gold prices.

Separately, Bessent also made news by expanding on President Donald Trump's pledge of economic warfare against Iran, saying the U.S. would impose "the toughest sanctions in history" on the country.

The threats further reduced optimism over a deal to fully reopen the Strait of Hormuz, lifting Brent crude to a one-month top of $94.71, before profit-taking set in. [O/R]

(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Nivedita Bhattacharjee)