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LONDON, July 19 (Reuters) The dollar rose and stocks and bonds fell on Wednesday after stronger than expected U.S. inflation data raised expectations of a rate rise in August, ahead of key testimony by the U.S. Federal Reserve chief.

The dollar hit 3-month highs against the euro after the U.S. core consumer price index -- excluding volatile food and energy costs -- rose an above-expected 0.3 percent in June.

U.S. rate futures showed the chance of an August Fed hike rose near 90 percent after the data, against 68 percent on Tuesday.

U.S. Treasuries prices extended earlier losses and U.S. stock futures pared gains ahead of the Wall Street open.

Markets are looking to comments at 1400 GMT from Federal Reserve Chairman Ben Bernanke for further clues on the outlook for U.S.

interest rates, after 17 straight rate rises to 5.25 percent.

Bernanke gives semi-annual testimony before Congress where he is likely to discuss the outlook for U.S. economy.

''Our guess is that he will steer a more neutral path this time, reiterating the line of the June FOMC (Federal Open Market Committee) statement, where they said that the future moves would be contingent upon the data flows,'' said Adam Cole, senior currency strategist at RBC Capital Markets.

Standard&Poor's 500 stock futures pared gains, to trade up 1.2 points, while Dow Jones industrial average futures were down 31 points, and Nasdaq 100 futures were down 8.25 points ahead of the Wall Street open.

The euro fell to $1.2458, its weakest since late April.

Benchmark 10-year U.S. Treasury notes fell 10/32 in price for a yield of 5.18 percent, versus 5.14 percent just before the report and versus 5.14 percent late on Tuesday.

Bund futures fell to the day's low of 115.58, down 18 ticks from before the data.

Euroepe's FTSEurofirst 300 index trimmed gains to stand 0.46 percent higher at 1,277.66 points.

Oil dropped below $73 a barrel to its lowest in over three weeks ahead of U.S. data on gasoline supplies, but recovered to $73.50.

Crude oil futures hit a record high of $78.40 on Friday.

Gold hit a one-week low below $620 an ounce, down from an eight-week high of $676 hit on Monday, losing ground as the dollar gained.

With the focus on Bernanke following the U.S. data, geopolitical events moved off centre stage for markets.

Israel unleashed fierce air strikes on Lebanon on Wednesday, killing 49 civilians and a Hizbollah fighter, while Israeli ground troops crossed the border to raid Hizbollah posts and Hizbollah television said three Israeli soldiers had been killed and 10 wounded in clashes with Shi'ite Muslim guerrillas.

REUTERS CS DB2015