Updates at 0515 GMT

By Ankur Banerjee

SINGAPORE, Sept 11 (Reuters) -Asian equities and U.S. stock futures slipped on Wednesday, while the dollar was on the back foot after a feisty U.S. presidential debate between Vice President Kamala Harris and Republican Donald Trump kept investors on edge.

The presidential hopefuls battled over abortion, the economy, immigration and Trump's legal woes at their combative first debate, leaving investors skittish ahead of U.S. inflation data that could influence the Fed's policy moves next week.

The MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.3%, S&P 500 futures EScv1 eased 0.5%, while the dollar was on the defensive, with the yen JPY=EBS rising over 1% to eight-month highs. FRX/

European stock markets were set for a soft open, with Eurostoxx 50 futures STXEc1 0.19% lower, German DAX futures FDXc1 little changed and FTSE futures FFIc1 down 0.17%.

Harris' late entry in the presidential race after President Joe Biden's withdrawal in July has tightened the race, prompting a reversal of trades that were put in place on expectations of a second Trump presidency.

Investors are focusing on fiscal policies and plans for the economy from the candidates but the debate was light on specific details, although betting markets swung in Harris' favour after the event. In a boost to the Harris campaign, pop megastar Taylor Swift said she would back Harris in the Nov. 5 election.

"With the dust settling on the Trump vs Harris presidential debate, it's clear that the market saw this debate going to Kamala Harris," said Chris Weston, head of research at Pepperstone.

"This debate was never going to be an exercise in digging deep into the weeds and into the granularity of the respective policies, and we're certainly not significantly wiser on that front."

The dollar index =USD, which measures the U.S. currency against six peers, was down 0.3% at 101.34, with the yield on the benchmark U.S. 10-year Treasury note US10YT=RR easing 2.4 basis points to 3.62%.

"You'd expect if he (Trump) was doing better, that you'd see a strong dollar coming out of this. So I suppose that's the way the market is looking at it. It's a slight lean towards Harris," said Rob Carnell, ING's regional head of research for Asia-Pacific

Japan's Nikkei sank nearly 2%, while Chinese stocks fell again. The Shanghai Composite index .SSEC was 0.92% lower while the blue-chip index .CSI300 eased 0.46%. Hong Kong's Hang Seng index slipped 1.4%.

INFLATION WATCH

Investor focus will now be on the U.S. Labor Department's consumer price index report later on Wednesday for policy clues although the Federal Reserve has made it clear employment has taken on a greater focus than inflation.

The headline CPI is expected to have risen 0.2% on a month-on-month basis in August, according to a Reuters poll, unchanged from the previous month.

While the Fed is widely expected to cut interest rates next week, the size of the rate cut is still up for debate, especially after a mixed labour report on Friday failed to provide clarity on which way the central bank could go.

"What we needed to see to spur the Fed into greater action would be much more obvious evidence of slowdown/recession, and in particular in the labour market. And I don't think we saw that in the last payrolls report," said ING's Carnell.

Markets are currently pricing in 65% chance of the U.S. central bank cutting rates by 25 basis points, while 35% chance is ascribed for a 50 bp cut when the Fed delivers its decision on Sept. 18, CME FedWatch tool showed.

The dollar remained defensive, with the yen JPY=EBS strengthening more than 1% to 140.71 per dollar, the highest since late December. The yen was also boosted by comments from Bank of Japan board member Junko Nakagawa.

Nakagawa reiterated in a speech that the central bank would continue to raise interest rates if the economy and inflation move in line with its forecasts.

In commodities, oil prices stabilised on Wednesday after dropping over 3% in the previous session, but still hovered near their lowest in three years after OPEC+ revised down its demand forecast for this year and 2025. O/R

Brent crude futures LCOc1 was last 0.43% higher at $69.49 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 rose 0.46% to $66.03 a barrel.

Reporting by Ankur Banerjee; Editing by Shri Navaratnam and Jacqueline Wong

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