UPDATE 1-Brazil's federal public debt up 1.85% in November, bond yields surge

Adds further data, context in paragraphs 2-7

BRASILIA, Dec 26 (Reuters) - Brazil's federal public debt rose 1.85% in November from the previous month, Treasury data showed on Thursday, amid a sharp increase in bond yields driven by fiscal concerns.

The total debt stock reached 7.204 trillion reais ($1.17 trillion), impacted by substantial interest costs and net issuance during the month.

Year-to-date, the federal public debt has grown 10.49%, adding 683.8 billion reais.

The government unveiled a fiscal package at the end of November that disappointed investors, triggering a significant sell-off in Brazilian assets and fueling a spiraling depreciation of the currency in Latin America's largest economy.

Reflecting higher risk premiums seen by investors, Brazilian 5-year inflation-linked bonds were trading at real yields above 7% by late November, compared to 5.2% at the end of last year.

The average cost of domestic issuance increased to 10.86% per year in November, from 10.78% in October.

The Treasury's liquidity reserve, designed to provide flexibility in debt management during market volatility, rose 4.09% in nominal terms to 856.1 billion reais in November, enough to cover 7.25 months of obligations.

($1 = 6.1708 reais)

(Reporting by Marcela Ayres; Editing by Gabriel Araujo and Sarah Morland)

((marcela.ayres@thomsonreuters.com; +55 11 5047-2444;))