(Updates prices for European market open)

By Kevin Buckland and Lawrence White

TOKYO/LONDON, May 21 (Reuters) - Stocks drifted lower

while the dollar held firm on Tuesday as investors awaited

minutes of the Federal Reserve's latest policy meeting to gauge

the timing and extent of possible interest rate cuts this year.

Gold eased back from Monday's all-time peak, while crude oil

declined on worries of U.S. interest rates staying high for

longer as Fed officials maintained a cautious view on a recent

easing of inflation.

Cryptocurrencies ether and bitcoin climbed to fresh six-week

peaks amid speculation that the U.S. Securities and Exchange

Commission (SEC) may approve a spot ether exchange-traded fund.

Markets currently factor in about 41 basis points of Fed

rate reductions this year, with a quarter-point cut fully priced

in for November.

Traders rushed to rebuild easing bets after data earlier

this month showed consumer price pressures eased in April

following three months of upside surprises at the start of the

year.

Even so, Fed officials are reluctant to declare the fight

against inflation over, with Vice Chair Philip Jefferson saying

on Monday that it was too early to tell if the slowdown is "long

lasting," and Vice Chair Michael Barr saying restrictive policy

needs more time.

Minutes of the last Fed meeting due on Wednesday could

provide valuable insight into the future policy path, although

the deliberations predate last week's softer CPI reading.

Europe's benchmark STOXX index of 600 stocks slid

0.3%, following an earlier decline of 0.9% in MSCI's broadest

index of Asia-Pacific shares outside Japan.

U.S. markets looked set to follow the muted tone with Nasdaq

futures inching 0.08% lower, while S&P 500 futures

were flat after Monday's 0.1% gain.

"Market sentiment remains relatively robust, with implied

volatility low, supported by greater confidence in U.S. rate

cuts this year," Kyle Rodda, senior markets analyst at

Capital.com, wrote in a note.

At the same time, record highs for metals such as gold and

copper "is being pointed to as a signal economic activity is

improving globally, and that may be a factor keeping inflation

sticky," Rodda said.

Gold eased 0.3% to about $2,417 per ounce, after

pushing to the cusp of $2,450 for the first time overnight.

The greenback held its ground against major peers, with the

dollar index flat at 104.62 after rebounding from a

five-week trough of 104.07 reached on Thursday.

The 10-year Treasury yield was little changed at

4.4355%, after ticking up 1.7 basis points on Monday.

Brent crude futures declined 0.8% to $83.04 a barrel

and U.S. West Texas Intermediate crude (WTI) eased 0.7%

to $79.16.

Meanwhile, traders snapped up cryptocurrencies following a

report that the SEC had abruptly asked exchanges that want to

trade ether ETFs to update regulatory filings, boosting bets

that approval could come this week.

Bitcoin climbed as high as $71,957 and ether

jumped to $3,720.80, both hitting levels not seen since April 9.

"Speculation around the ether ETF has certainly played its

part in the move, throwing fuel on the crypto bull market

bonfire that had reignited after last week's cooler U.S. CPI

data," said IG analyst Tony Sycamore.

Sycamore expects bitcoin to retest its all-time high at

$73,803.25 in the near future before making a push for $80,000.