(Updates prices as of 1400 GMT, reflects U.S. market open)

* Treasury yields rise, oil rebounds

* Yen at nine-month low as traders eye intervention cues

* MSCI world index at five week low

LONDON/WASHINGTON, Aug 17 (Reuters) - The U.S. 10-year Treasury yield touched its highest in 10 months and Wall Street was mixed in early trading on Thursday, as investors juggled fears that U.S. interest rates might stay higher for longer alongside China's economic woes.

Benchmark 10-year yields reached 4.312%, testing October's 4.338%, a break past which would be its highest since 2007. Yields were slightly lower at 4.302% following the U.S. market open.

"The reason behind the rise is the strong data on U.S. domestic demand. The minutes (from the Fed's July meeting), feel really dated, they are talking about a gradual slowdown in the U.S. economy, but when you look at the data we are not even in a slowdown," said Samy Chaar, chief economist at Lombard Odier.

Minutes from the Fed's July rate-setting meeting released Wednesday showed policy makers were divided over the need for more rate increases, with some citing the risk to the economy of pushing hikes too far.

On Thursday, the U.S. Labor Department reported the number of Americans filing new claims for jobless benefits fell in the last week, suggesting the labor market remains tight despite the Fed's efforts to cool the economy and inflation. That continued a trend of economic data releases throughout the week that showed little sign of an imminent slowdown.

"In short, the labor market is still strong but much more balanced than during the severe worker shortages of the early recovery from the pandemic," said Bill Adams, chief economist for Comerica Bank.

Wall Street was mixed in early trading amid this murky economic picture, with the Dow Jones Industrial Average up 0.27% and the S&P 500 climbing 0.16%, while the Nasdaq Composite dropped 0.12%.

MSCI's world index was down 0.2% on Thursday, having dropped to its lowest level since July 6 early in the session.

CHINA WOES

China's economy was the other topic on investors' minds as a series of economic data and ructions in the property sector have laid bare the stumbling post-pandemic recovery.

The latest development was embattled asset manager Zhongzhi Enterprise Group saying it will conduct a debt restructuring, a further sign of turmoil in China's $3 trillion shadow banking sector.

In currency markets, the dollar index, which measures the U.S. currency against six rivals, was down slightly after hitting a two-month peak of 103.59, moving down 0.2% to 103.23.

The Japanese yen passed a nine-month low of 146.57 per dollar earlier in the session and was last down to $145.87, with traders keeping a vigil on possible intervention chatter from Japanese officials.

Finance Minister Shunichi Suzuki said on Tuesday authorities were not targeting absolute currency levels for intervention.

In commodities, oil prices were rebounding after three sessions of declines. U.S. crude rose 1.16% to $80.29 per barrel and Brent was at $84.21, up 0.92% on the day.

The spike in rates has weighed on non-yielding gold, which touched a five-month low on Thursday. The metal was last $1,896 an ounce, having dropped to as low as $1,888.30.

(Reporting by Ankur Banerjee in Singapore and Alun John in London, additional reporting by Anisha Sircar in Bengaluru; Editing by Sonali Paul, Angus MacSwan, Chizu Nomiyama and Nick Macfie)