NEW YORK - U.S. Treasury yields slid on Monday in choppy trading, as growing global growth worries deepened after unexpectedly weak economic data from China and a steep drop in New York state's factory activity.

Since hitting its highest in roughly 3-1/2 years early last week, the benchmark 10-year yield has fallen about 25 basis points, highlighting investor uncertainty in the wake of aggressive monetary tightening from the Federal Reserve.

"Price action in Treasuries, commodities and currencies are showing you the first signs that potentially worries about future growth are beginning to be the more dominant driver," said Huw Roberts, director of analytics at Quant Insight in London.

"There has always been the debate that when the Fed starts to react to inflation, like they're reacting now, there would be this transition, where we stop worrying about price inflation and we start worrying about growth deflation," he added.

Fears about a global slowdown were in focus on Monday, after China's poor data. China's economic activity contracted sharply in April as COVID-19 lockdowns took a heavy toll on consumption, industrial production and employment.

Chinese April retail sales plunged 11.1% on the year, almost twice the fall forecast, while industrial output dropped 2.9% when analysts had looked for a slight increase. In the United States, factory activity in New York state slumped in May for the second time this year amid a collapse in new orders and shipments.

The New York Fed said on Monday its "Empire State" index on current business conditions tumbled 36.2 points to a reading of -11.6 this month. A reading below zero signals a contraction in the New York manufacturing sector.

"The drop-off reported in May and weak levels for some of the main indicators could be a sign that the stronger dollar is weighing on the manufacturing sector," wrote Daniel Silver, economist and executive director at JP Morgan in New York.

The U.S. dollar index has gained 9.2% so far this year, but was last down 0.1% at 104.47, in tandem with the decline in U.S. Treasury yields.

In midmorning trading, the yield on 10-year Treasuries slid 5 basis points to 2.882%, while the 30-year bond slipped 2 basis points to 3.072%. On the front end of the curve, U.S. two-year yields, which are sensitive to Fed rate expectations, fell 3 basis points to 2.565%.

The yield curve has also flattened on the day, with the spread between U.S. two and 10-year yields narrowing to 30 basis points. Inflation expectations have also moderated. The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) slipped to 3.064% from 3.076% late on Friday. U.S 10-year breakeven rates slid to 2.768%, from 2.784% on Friday.

(Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan Oatis)