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TOKYO, June 15 (Reuters) The dollar steadied on Thursday after failing to capitalise on a rise in U.S. core consumer prices even though the data helped to cement expectations the Federal Reserve will raise interest rates this month.

Traders trimmed long dollar positions accumulated during the currency's climb from a one-year low against the euro at the start of the month, and its rise from an 8-month trough versus the yen in mid-May.

Analysts said that rate rises would continue to support the dollar but the possibility of a slowdown in economic growth might start to weigh.

''The dollar could face selling on concerns over the U.S.

economy,'' said Daisuke Uno, market strategist at Sumitomo Mitsui Banking Corp.

Global trade imbalances could also haunt the dollar and had traders awaiting U.S. capital flows data for April due at 1300 GMT to see if inflows from foreign investors covered the country's current account shortfall in that month.

The widening U.S. trade deficit has nagged the dollar for years, and calls in April from officials of the Group of Seven economic powers for currencies of emerging Asian nations to rise to help imbalances triggered a sell-off in the dollar.

''Today's TIC data could reignite concerns about global trade imbalances,'' said Junya Tanase, forex strategist at JPMorgan Chase.

''If it turns out that the dollar's short-covering rally still has some steam, the impact of a weak figure could be limited, but if short-covering has run its course, the dollar could be prone to weakness.'' A Reuters poll shows net capital inflows of $67.5 billion.

Tanase added that it was a matter of time before the market starts to consider whether the economy could cope with the Fed extending its two-year credit-tightening cycle.

By 0545 GMT, the dollar was little changed on the day at 115.00 yen. It hit session highs around 115.40 yen after the release of the CPI on Wednesday.

The euro edged up to $1.2610 It ended the previous day's trade up 0.4 percent after the dollar was unable to keep initial gains made on the CPI data.

The yuan rose as high as 7.9980 per dollar, its strongest level since mid-May after China's central bank set the mid-point of the yuan's trading rate below 8.0.

A record-high Chinese trade surplus in May has fueled some speculation that the central bank could allow a stronger yuan, particularly ahead of a summit of leaders from the Group of Eight industrialised nations next month.

RATES TO SUPPORT? U.S. core CPI rose 0.3 percent in May from the previous month, higher than forecasts for a 0.2 percent climb.

That helped to convince all 20 primary bond dealers polled by Reuters after the data landed that a rate hike is in the bag at the Fed's two-day policy meeting that ends on June 29.

Some in the market have even started to talk of an additional rate increase in August, after one in June, traders said.

A broad move by investors away from risky assets, given a slump in global stocks and commodities prices, also contributed to the recent short-covering rally in the dollar.

The Reuters Tankan on Thursday produced a diffusion index of plus 39 in June, a record high indicating that business confidence among Japanese manufacturers continues to improve despite a steep fall in Japanese share prices.

Signs of economic growth could bolster expectations for the Bank of Japan to raise rates during the July-September period.

The central bank kept monetary policy unchanged as expected at the end of a two-day meeting on Thursday.

Most in the market expect the central bank to raise rates for the first time in six years in July, but a nearly 20 percent fall in the Nikkei stock average since April has raised some concerns that the BOJ could delay a move.

The Nikkei was up 1.3 percent in late afternoon trade, extending its recovery to a second session.

REUTERS CS RS1149