NEW YORK (CNN/Money) - Bond prices slipped Tuesday after a surprisingly sharp gain in the producer price index raised inflation fears, while the dollar was mixed against the euro and yen as traders couldn't shake worries about a growing current account gap.

The benchmark 10-year note lost 4/32 of a point to 100-11/32 to yield 4.21 percent, up from 4.19 late Monday. The 30-year bond fell 3/32 of a point to 106-29/32 to yield 4.91 percent, up from 4.90 percent. Bond prices and yields move in opposite directions.

The two-year note edged lower 1/32 of a point to 99-8/32, yielding 2.89 percent, up from 2.87 percent late Monday, while the five-year note shed 3/32 to 99-23/32 to yield 3.56 percent, up from 3.53 percent.

Wholesale prices soared in October as rising energy prices resulted in the largest increase since 1990, the Labor Department said Tuesday, with the overall producer price index gaining 1.7 percent, compared with a 0.1 percent rise in September.

Economists surveyed by Briefing.com had forecast a 0.6 percent rise in the PPI.

The jump in October producer prices, driven by a massive rise in energy costs, took traders by surprise, and stirred concerns that inflation was rising faster than anticipated. Inflation eats away at returns on fixed-income holdings, so bond investors tend to panic at the first sign of price increases.

Analysts speculated that the October consumer price index, due out Wednesday, might also beat estimates, which would reinforce expectations for a Fed rate hike in December and raise the risk of another move in February.

In the currency market, the dollar fell against the euro but gained on the yen.

The euro bought $1.2957, up from $1.2945 late Monday, while the dollar bought ¥105.38, a bit higher than ¥105.32 Monday.

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Data released by the Treasury showed net capital flows into the U.S. in September were enough to cover the country's current account

gap in that month and were larger than analysts had forecast.

But the dollar later retreated because the data did not fundamentally change the market view that the deficit is worsening and the dollar will fall as a result, Clyde Wardle, currency strategist at HSBC in New York, told Reuters.

Philadelphia Federal Reserve President Anthony Santomero said in a speech Tuesday that the U.S. was likely to have a sizable trade deficit for the foreseeable future.