Dlr near 2-year low vs euro, 15-yr low vs sterling

TOKYO, Apr 18 (Reuters) The dollar stayed near a two-year low against the euro on Wednesday after data showing U.S. core consumer prices rose less than expected in March, bolstering the view that the Federal Reserve may be more inclined to cut interest rates this year.

The U.S. currency also continued its weak run against sterling after rising above $2 for the first time since 1992, as UK inflation data reinforced expectations the Bank of England will raise rates next month.

''The market is focusing on currencies with prospects of rate hikes such as the euro and the Australian and New Zealand dollars,'' said Minoru Shioiri, senior manager of forex trading at Mitsubishi UFJ Securities.

''The dollar on the other hand was not helped by the weak U.S.

data,'' Shioiri said.

The euro was trading firm at $1.3575, little changed from late in New York, after touching a two-year high of $1.3595, in sight of a record high of $1.3670.

The New Zealand dollar rose to a post-float high near $0.7480, as the country's high interest rates drew buyers even after data showing slower consumer price growth than expected.

The kiwi was allowed to float freely against the U.S. dollar in March 1985.

New Zealand consumer prices rose at a slower than forecast rate of 0.5 percent in the first quarter, but that did little to cool the view that the central bank may raise its cash rate in April or June.

U.S. core inflation in March grew just 0.1 percent, below market forecasts for a rise of 0.2 percent, pushing the dollar down in the previous session.

The dollar also got little help from figures showing U.S.

industrial output fell 0.2 percent in March.

After the data, the interest rate futures market was factoring in the chances of a 0.25 percent rate cut by year-end in the benchmark federal funds rate, currently at 5.25 percent, and appeared to be leaning more toward a second cut thereafter.

Sterling hovered around $2.0065, near its highest point since September 1992 hit the previous session. The pound last hit $2 just before Britain exited the pre-euro Exchange Rate Mechanism in 1992.

Data on Tuesday showed British consumer prices accelerated in March, bolstering expectations for a 25 basis point UK rate hike in May to 5.5 percent -- higher than the U.S. federal funds rate.

The dollar was little changed against the yen at 118.95 yen after falling to 118.82 yen the previous session. The euro was stabilising around 161.25 yen after pulling back from a record high of 162.43 yen hit earlier this week.

(Additional reporting by Shiho Tanaka) Reuters HK VP0607