Array

TOKYO, Sep 29 (Reuters) The yen steadied on Friday after a round of Japanese data including consumer prices reinforced market expectations that the Bank of Japan will bump up in interest rates only gradually.

The low-yielding yen initially dipped after the Japanese core consumer price index matched forecasts, but it trimmed those slight losses following a healthy reading for industrial production that also met forecasts.

''The market squared positions a bit before the CPI landed, so the yen went down a bit afterwards. But the numbers are flat so there was no change in the action,'' said the chief trader at a European investment bank in Tokyo.

''The market is basically bullish in the dollar, and the yen is bearish.'' The BOJ has held key rates at 0.25 percent since July, when it hiked rates for the first time in six years. It is seen staking further rises on data showing a buoyant economy and rising inflation.

In early Tokyo trade, the dollar was little changed on the day at 117.80 yen after climbing 0.2 percent on Thursday.

The euro was nearly flat at 149.65 yen after rising 0.3 percent the previous day, in sight of the record high of 150.73 yen hit at the end of last month.

The low-yielding yen was dented on Thursday after two European Central Bank governing council members signalled more rate rises were needed to ward off inflation.

The ECB has lifted rates, now at 3 percent, four times since December and investors expect another quarter-percentage-point hike at its policy meeting in October.

Against the dollar, the euro hovered around $1.2705 REUTERS AD RAI0722