* U.S. consumer prices edge up; retail sales increase
* C$ drops to one-week low as oil and stocks slide (New throughout, updates prices and market activity to U.S. market open, changes dateline, previously LONDON)
NEW YORK, Nov 15 (Reuters) - The dollar trimmed losses against a basket of major currencies on Wednesday, after data showed a surprise rise in retail sales last month as well as an uptick in underlying inflation, cementing expectations for an interest rate hike in December.
U.S. consumer prices barely rose in October as the boost to gasoline prices from hurricane-related disruptions to Gulf Coast oil refineries was unwound, but rising rents and healthcare costs pointed to a gradual buildup of underlying inflation.
The Labor Department said on Wednesday its Consumer Price Index edged up 0.1 percent last month after jumping 0.5 percent in September. Economists polled by Reuters had forecast the CPI nudging up 0.1 percent in October.
Other data on Wednesday showed an unexpected increase in retail sales last month as heavy price discounting by automobile manufacturers lifted purchases of motor vehicles.
"The revisions on retail sales were a little bit better. You would expect the dollar to bounce back a little bit and it has," Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California, said.
The dollar index, which measures the greenback against six rival currencies, was down 0.08 percent at 93.748. Before the release of the data, the index was down 0.3 percent on the day.
"With signs that underlying inflation pressures are starting to pick back up again, we think the Fed will need to step up the pace of tightening next year, raising the Fed funds rate a total of four times in 2018," Michael Pearce, U.S. economist, at Capital Economics in New York, said in a note.
The euro was up 0.12 percent at $1.181 against the greenback, after earlier rising as high as $1.186.
The euro has gained in recent days as investors grow optimistic about the single currency's outlook with growing doubts about the prospects of the U.S. tax plan also underpinning gains.
Against the yen, the dollar was 0.44 percent lower.
"Investors are looking for a little bit of a safe haven," said Minh.
Stocks around the world were down on Wednesday as weaker commodities weighed.
Japan is the worlds largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis, thus pushing up the yen.
The Canadian dollar weakened to a one-week low against its U.S. counterpart as oil and stocks fell. (Reporting by Saqib Iqbal Ahmed; Editing by Susan Thomas)