Updates prices as of 0540 GMT

By Kevin Buckland

TOKYO, Aug 15 (Reuters) -Asian stocks were firm on Thursday while the dollar remained on the back foot amid lower U.S. Treasury yields after benign consumer inflation data overnight reinforced bets for the Federal Reserve to start cutting interest rates next month.

Regional markets took their lead from gains on Wall Street, with Japan's Nikkei .N225 rising 0.8% as of 0540 GMT and Australia's stock benchmark .AXJO up 0.14%.

Japanese stocks got extra impetus from data showing the economy rebounded strongly in the second quarter.

Chinese blue chips .CSI300 added 0.7%, getting additional support from expectations for more stimulus from Beijing amid another batch of lacklustre economic data. Hong Kong's Hang Seng .HIS, however, slipped 0.2%.

U.S. S&P 500 futures EScv1 pointed 0.16% higher after the cash index advanced 0.4% on Wednesday, buoyed by the slowest rise in the consumer price index in more than three years.

Pan-European Stoxx 50 futures STXEc1 rose 0.38%.

"The report 'checked the box' for the Fed to start cutting rates in September," TD Securities analysts wrote in a report.

"Our view is that the Fed will kickstart the easing cycle with a 25bp cut in September, but a 50bp reduction is not completely off the table."

The dollar remained weak after slumping overnight to its lowest level to the euro since the end of last year. The single currency EUR=EBS traded flat at $1.1012 after reaching $1.10475 in the previous session.

The 10-year Treasury yield US10YT=RR ticked up slightly to 3.83% in Asian hours, after dipping to as low as 3.811% on Wednesday.

"The USD looks cheap to the global risk events piling up," the TD analysts said. "We are cautious of a correction and generally continue to favor long USD."

Traders remain convinced that the Fed will reduce rates on Sept. 18 for the first time in 4-1/2 years, but are split on whether policy makers will opt for a super-sized 50 basis-point reduction. While inflation is slowing, signs it may remain sticky spurred a reduction of bets on a larger cut to 37.5% from about 50% a day earlier. FEDWATCH

A major macroeconomic test looms later on Thursday with the release of U.S. retail sales figures.

"If we were to see a negative retail control sales number, it would likely set alarm bells ringing, given the market's recent concerns about a recession in the U.S.," said Tony Sycamore, a market analyst at IG.

The dollar eased 0.1% to 147.12 yen JPY=EBS as the pair continued its week-long consolidation around the 147 mark.

Sterling remained depressed after softer-than-expected UK inflation figures hinted at faster, deeper Bank of England rate cuts. The currency edged up 0.1% to $1.2843 after sagging 0.3% on Wednesday.

The Australian dollar AUD=D3 advanced 0.36% to $0.6620, erasing early losses after a surprise surge in employment helped offset weakness in key commodity prices.

Gold XAU= edged up 0.2% to $2,453 per ounce after Wednesday's 0.7% dive.

Oil prices trod water following the previous day's losses, following an unexpected rise in U.S. crude inventories.

Brent crude futures LCOc1 were flat at $79.81 a barrel, while U.S. West Texas Intermediate crude CLc1 edged up 0.1% to $77.06. Both benchmarks fell more than 1% on Wednesday.

Reporting by Kevin Buckland; Editing by Christian Schmollinger and Shri Navaratnam

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