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Stock futures rise, dollar eases as inflation meets

expectations

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US dollar at one year high vs euro, three month peak vs

yen

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Crude oil, gold rise

(Updates throughout; refreshes prices at 1355 GMT)

By Amanda Cooper

LONDON, Nov 13 (Reuters) -

U.S. stock futures cut losses, while the dollar retreated on

Wednesday, after data showed U.S. inflation continued to slow as

expected last month, helping firm up traders' conviction that

the Federal Reserve may cut rates again in December.

The Bureau of Labor Statistics said the consumer price

index rose by 2.6% in October, while the core rate, which strips

out food and energy, rose 3.3% - in line with forecasts.

U.S. futures rose after the numbers, turning modestly

positive, indicating the major benchmark indices could recoup

some of Tuesday's decline at the open later.

The dollar index edged lower, while short-dated

U.S. Treasury yields dropped, as investors piled into two-year

notes, which in turn helped gold modestly

extend the day's rally.

MSCI's all country world index was last

down 0.17%, with shares in Europe down a whisker after

the previous day's 2% loss.

"The in-line number is allowing the market to breathe a

little easier and to focus more on the positives of less

regulation, a potential increase in business," Robert Pavlik,

senior portfolio manager at Dakota Wealth, said.

"Right now, we're on the glide path to another rate cut.

It could get disrupted but right now it looks like we could get

another rate cut," he said.

Treasury yields fell sharply, with two-year notes

dropping to a session low of 4.256%, from above 4.36%

right before the data, as traders adjusted their calculations on

the likelihood of a December rate cut from the Fed.

Traders were placing a near-69% chance of a

quarter-point cut when the Fed meets on Dec. 18, compared with

around 62% earlier on Wednesday, according to CME Group's

FedWatch Tool.

Bond yields have soared since Donald Trump was elected back

to the White House last week on expectations lower taxes and

higher tariffs will increase government borrowing and push up

the fiscal deficit. Trump's proposed policies are also seen by

investors as fuelling economic growth and inflation, potentially

impeding the path to lower Fed interest rates.

But, analysts say, there is more to come as the Republicans

sit within striking distance of winning a majority in the House

of Representatives and with it full control of Congress.

"We are still in the midst of the repricing of the Trump

trade," said Samy Chaar, chief economist at Lombard Odier,

"there was this slight uncertainty around the House, but now

we're close to certainty when it comes to a Republican sweep."

STRONG DOLLAR

In currency markets, the drop in Treasury yields put the

dollar under a degree of pressure, but it remained near a

six-month high against a basket of major currencies..

The euro was last up 0.1% at $1.0630, still near a

one-year low, while the Japanese yen was also weaker on the day

but managed to claw beyond the 155 per dollar level to 154.615.

Commodities, which have suffered under the dollar's

strength and from concern among investors about the growth

outlook in key consumer China, also recovered some losses.

Gold rose 0.6% to $2,610 an ounce, recovering

from the previous day's near-two month low, while silver rose

0.8% on the day to $30.93 an ounce.

Crude oil also rebounded a touch after hitting to its

lowest in two weeks on Tuesday after OPEC

cut

its forecast for global oil demand growth this year and

next, highlighting weakness in China and some other regions.

Brent crude futures rose 0.4% to $72.15 a

barrel, while U.S. West Texas Intermediate (WTI) crude

rose 0.37% to $68.36.

(Additional reporting by Kevin Buckland in Tokyo, Alun John in

London and Sinead Carew in New York; Editing by Toby Chopra,

Mark Potter and Shreya Biswas)