SYDNEY, Aug 14 (Reuters) - Asian shares rose and the

dollar nursed losses on Wednesday after soft U.S. producer

prices data stirred hopes that consumer price inflation would be

benign, sending bond yields lower.

The kiwi dollar slumped 0.7% after the Reserve Bank

of New Zealand cut interest rates by 25 basis points to 5.25%

and projected more easing to come.

Adding to the busy news flow in the Asia morning were

headlines that Japanese Prime Minister Fumio Kishida would step

down as ruling party leader in September, ending a three-year

term marked by rising prices and marred by political scandals.

The yen strengthened slightly to 146.53 per dollar

and the benchmark Nikkei gave up gains to be flat after

news of Kishida's resignation broke. Still, the Japanese stock

index remains well above the lows hit after last week's massive

selloff.

MSCI's broadest index of Asia-Pacific shares outside Japan

climbed 0.5%. Hong Kong's Hang Seng,

however, slipped 0.4%, and mainland blue chips lost

0.6%.

U.S. equity futures were flat after a strong rebound on Wall

Street overnight as data showed U.S. producer prices rose by

less than expected in July, suggesting inflation continued to

moderate.

That led markets to nudge up the chance of an outsized

half-point rate cut from the Federal Reserve in September to 53%

from 50% a day earlier, according to the CME FedWatch Tool.

Goldman Sachs lowered their expectations for the core

Personal Consumption Expenditures (PCE) price index, the Fed's

preferred gauge of inflation, to be up 0.14% in July, moderating

from the previous forecast of 0.17%.

Investors now await all-important consumer price figures for

July later in the day where economists look for rises of 0.2% in

both the headline and core, with the annual core slowing a tick

to 3.2%.

"Risk will find buyers if additional implied rate cuts are

driven by a reduced inflation dynamic," said Chris Weston, head

of research at Pepperstone.

"However, the opposite is true if any additional rate cuts

are driven by weaker growth or poor labour market readings -

this week's U.S. retail sales report could therefore be

influential on that thesis."

U.S. bonds saw solid buying overnight with two-year yields

at 3.4142%, having fallen seven basis points in the

offshore session.

Ten-year Treasury yields held at 3.3341% after a

drop of 5 bps overnight.

The U.S. dollar was dragged lower by falling bond yields. It

held at 102.62 against its major peers, having fallen

0.5% overnight.

The euro jumped 0.6% overnight and was last at

$1.0996, nearing a major resistance level of $1.1.

In commodities, crude oil recovered some of the previous

day's losses as estimates showed shrinking U.S. crude and

gasoline inventories. They had been on a winning streak on

concerns about an imminent attack from Iran on Israel.

Brent crude futures rose 0.6% to $81.19 a barrel,

while U.S. West Texas Intermediate crude also gained 0.7%

to $78.91.

Gold prices were 0.1% higher at $2,468.78 an ounce.