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LONDON, June 16 (Reuters) The dollar slipped further from this week's seven-week highs against the euro and yen on Friday as a rebound in global stock and commodity prices lured investors away from the U.S. currency.

The dollar was also on the backfoot after Federal Reserve Chairman Ben Bernanke steered clear of fuelling inflation concerns on Thursday, saying the impact of high energy costs on other prices has been limited so far.

''The overall tone of Bernanke was less determinedly hawkish than previously,'' said David Simmonds, head of foreign exchange strategy at Royal Bank of Scotland.

''There's been a booming rebound in stocks and commodities and that plays to the theme that the dollar has been moving on position adjustment,'' he added.

Asian and European stocks rose across the board, hurting the dollar as investors switched from cash into riskier assets.

By 1000 GMT, the euro was up 0.2 percent at $1.2658, having hit a seven-week low of $1.2528 earlier this week.

The dollar was down 0.1 percent at 114.85 yen after hitting a seven-week high of 115.44 this week.

''Technicians think this is the end of the dollar correction around $1.25 and they are now looking for euro/dollar to go back up to $1.29,'' said Chris Turner, head of foreign exchange strategy at ING.

INFLATION WATCH Despite striking a softer tone than before, Bernanke did warn a quickening in inflation warranted monitoring.

Speaking in Seoul, St Louis Fed President William Poole echoed this view and said the Fed would respond to persistent inflation with policies that keep it from increasing further.

The market unanimously expects the Fed to raise rates for a 17th straight time this month, taking the fed funds rate to 5.25 percent, and investors are pricing in a chance of further credit tightening in August.

The dollar faces a test from data on the U.S. current account deficit, due at 1230 GMT, which has nagged the currency for years on worries about the country's ability to attract capital and fund the gap.

In a Reuters poll, economists forecast the data to show the deficit shrank to $222.5 billion in the first quarter from $224.88 billion the previous quarter.

The University of Michigan preliminary June sentiment index is also due.

Elsewhere, the Chinese yuan strengthened to 7.9970 to the dollar, the strongest level since it was revalued last July.

U.S. Treasury Undersecretary Tim Adams told Reuters on Friday that China's economy appeared to be overheating and said he wanted to see yuan flexibility.

REUTERS CS DS1633