* ECB upgrades growth forecast, cuts inflation outlook
* Ex-FBI chief Comey testifies, markets show little reaction (Updates prices, adds comment)
By Gertrude Chavez-Dreyfuss
NEW YORK, June 8 (Reuters) - U.S. Treasury yields rose on Thursday as investors looked past the testimony of former Federal Bureau of Investigation chief James Comey, who made no new revelation about the agency’s Russian probe, to focus on the Federal Reserve’s widely expected interest rate hike next week.
Comey, fired by U.S. President Donald Trump on May 9, testified before a Senate committee on Thursday that he was disturbed by Trump’s bid to get him to drop a probe into former national security adviser Michael Flynn. Comey, however, would not say whether he thought the president sought to obstruct justice.
The Senate was investigating whether the Trump campaign team conspired with Russia to influence the U.S. presidential election last year.
“I think the market is taking less of an alarmist review of this situation because there is no smoking gun here that there has been any illegal activity by high-ranking officials, so it’s not particularly impactful for thinking about the impact for Trump’s economic agenda,” said Tom Simons, money market economist, at Jefferies in New York.
Tom di Galoma, managing director at Seaport Global Holdings in New York, noted that the more important driver for the market was next week’s expected rate hike.
Rate futures have fully priced in a Fed tightening at the June 14 policy meeting.
The European Central Bank’s decision on Thursday not to cut interest rates as the euro zone economy rebounded, as well as remarks by its president, Mario Draghi, spurred a brief initial drop in U.S. yields, in line with those of German bonds.
The ECB also said subdued inflation meant it would continue to pump stimulus into the region’s economy.
Draghi said in a news briefing that reducing asset purchases in the region was not discussed at the meeting, and that the ECB would be in the market for a long time.
The ECB estimated inflation of 1.5 percent in 2017 and 1.3 percent in 2018, compared with its forecasts of 1.7 percent and 1.6 percent respectively in March. That is well below its target of just under 2 percent.
In late trading, U.S. 10-year notes were last down 4/32 in price, with yields at 2.193 percent, compared with 2.180 percent late on Wednesday.
U.S. 30-year bonds fell 10/32 in price, yielding 2.852 percent, compared with Wednesday’s 2.837 percent. (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Dion Rabouin; Editing by Chris Reese and Richard Chang)