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TOKYO, Apr 28 (Reuters) The yen inched down against the dollar on Friday despite a barrage of upbeat economic data that did little to alter expectations the Bank of Japan will raise interest rates later in the year.

The dollar stayed near a seven-month low versus the euro after Federal Reserve chief Ben Bernanke gave the clearest signal yet on Thursday that the central bank's two-year campaign of raising interest rates may be coming to an end.

Core CPI in Japan rose 0.5 percent in March from a year earlier, a tad weaker than market expectations for a 0.6 percent rise, while prices in Tokyo for April -- a leading indicator of nationwide prices -- rose more than expected.

The data showed that the core CPI, which is closely watched by the central bank as it mulls when to raise rates, climbed in the fiscal year to March for the first time in eight years.

The data supported the prevailing view that deflation in Japan is ending.

''If the CPI had been stronger, the market would have tried fresh selling in the dollar against the yen,'' said a trader at a European bank. ''The data was not a surprise, so some people were disappointed.

In early Tokyo trade, the dollar was at 114.25 yen, up slightly from 114.10 yen in late U.S. trade and from a three-month low of 113.83 yen hit on Thursday.

Traders said that bids from Japanese investors were blocking the dollar's fall.

The euro was little changed at $1.2535, near a seven-month peak of $1.2549 hit the previous day following Bernanke's comments.

An end to the Fed's current cycle of hiking rates would remove a major pillar of support for the dollar that had helped it rally last year, especially with both the euro zone and Japan expected to tighten policy this year.

The dollar has been under pressure since last weekend when finance chiefs of the Group of Seven major industrialised nations urged China and other Asian countries to let their currencies rise to help mend global imbalances.

The G7 statement sparked speculation that G7 policy makers were seeking a cheaper dollar to reduce the huge deficit in the U.S. current account and surpluses in the current accounts of many Asian countries.

REUTERS AD RAI0711