* Dollar/yen nears 100 yen on Fed tapering expectations
* Sterling hits 2-month low vs dollar on UK inflation data
NEW YORK, Nov 12 (Reuters) - The dollar advanced to a one-month high against the yen on Tuesday as investors bet the Federal Reserve would begin trimming its stimulus program sooner than anticipated. Speculation has grown that the Fed will start to reduce its $85 billion-a-month bond-buying program sooner rather than later after last Friday's release of better-than-expected U.S. jobs numbers. A reduction in the Fed's asset purchases is positive for the U.S. currency because it means there would be fewer dollars in the financial system. Atlanta Fed President Dennis Lockhart told reporters on Tuesday that a tapering of the quantitative easing program remains a possibility at the Dec. 17-18 policy meeting.
"There has been a broad strengthening of the U.S. dollar because of the December taper talk," said Greg Moore, currency strategist at TD Securities in Toronto. Although investors were disappointed when the Fed did not begin to slow the program in September and pushed out tapering expectations until as far as April, they are now seeing data, such as the nonfarm payrolls report, that could lead the Fed to reduce accommodation in December. The dollar was last up 0.6 percent at 99.70 yen, with the peak of 99.79 yen, its strongest since Sept. 13. The dollar faces resistance at 100 yen and at the September peak of 100.62 yen. The euro was up 0.2 percent at $1.3425 after rising to a three-day high. The single currency was well above the two-month low of $1.3295 hit on Thursday when it sold off sharply after the European Central Bank's unexpected interest rate cut. The dollar index rose 0.1 percent to 81.161, edging back toward a two-month peak of 81.482 struck on Friday.
POUND DIPS Sterling slid to a two-month low against the dollar of $1.5852 after UK inflation for October fell more than expected. However, the pound might get a lift from the central bank's quarterly inflation report on Wednesday. Many in the market expect the BoE to bring forward the point at which it sees UK unemployment hitting 7 percent, the level at which it has said it would consider raising rates. Sterling was last down 0.6 percent at $1.5906. Scandinavian currencies were among the biggest losers, with the Swedish crown touching a 17-month low against the euro after weak Swedish inflation data prompted talk of a rate cut. "The CPI print from Sweden was the 'nail in the coffin' for getting a rate cut. Given that the market is not fully priced for a cut, there is some more room for the Swedish crown to fall," said Carl Hammer, chief currency strategist at SEB in Stockholm. He said SEB had changed their forecasts after the data and now expected an easing of official borrowing costs in December, adding that the Swedish crown could fall to 9 or 9.10 crowns per euro. The Norwegian crown also hit its lowest in nearly four years against the euro on expectations the Norwegian Central Bank would follow the European Central Bank and cut rates next year.