FOREX-CPI miss keeps dollar in check, sterling falls

* Dollar index holds below 2018 peak as CPI disappoints

* Euro benefits as dollar rally stalls

* Bank of England leaves rates alone, cuts growth outlook

(Adds market action, changes dateline, previous LONDON) NEW YORK, May 10 (Reuters) - The U.S. dollar fell on Thursday against a basket of currencies, holding below its 2018 peak, as a smaller-than-expected increase in consumer prices reduced bets that inflation is accelerating, which could push the Federal Reserve to hike interest rates faster. The British pound hit a four-month low versus the greenback after the Bank of England left key borrowing costs unchanged but reduced its growth and inflation outlook for 2018 and 2019. Weaker price growth among major economies has reduced expectations that most central banks other than the Fed will reduce their bond purchases or raise interest rates. The U.S. Consumer Price Index, the government's broadest inflation gauge, increased 0.2 percent in April, while the CPI rate that excludes volatile food and energy prices edged up 0.1 percent. Economists polled by Reuters had forecast the CPI likely grew by 0.3 percent last month, and the core CPI gained 0.2 percent. "With the disappointment of the late CPI, it does knock the wind out of the dollar for a bit," said Mazen Issa, senior FX strategist at TD Securities in London. Lower U.S. Treasury yields added pressure on the greenback which had rallied for over two weeks on traders exiting their bearish bets on the dollar on signs of overseas growth, in particular in Europe, cooling quicker than the United States. At 11:09 a.m. EDT (1519 GMT), the dollar index was down 0.1 percent against a basket of six major currencies at 92.931 after hitting a 4-1/2-month high of 93.42 on Wednesday. Benchmark 10-year Treasury yield was down 2 basis points at 2.973 percent. The British pound was down 0.4 percent at $1.3495 after falling to $1.3460, the lowest level since Jan. 11 after the latest BOE statement.

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Currency bid prices at 11:15AM (1515 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change

Session

Euro/Dollar EUR= $1.1886 $1.1850 +0.30% +0.00% +1.1946 +1.1844 Dollar/Yen JPY= 109.6100 109.7400 -0.12% +0.00% +110.0100 +109.3200 Euro/Yen EURJPY= 130.29 130.04 +0.19% +0.00% +130.7500 +130.0000 Dollar/Swiss CHF= 1.0035 1.0050 -0.15% +0.00% +1.0057 +0.9995 Sterling/Dollar GBP= 1.3491 1.3544 -0.39% +0.00% +1.3617 +1.3461 Dollar/Canadian CAD= 1.2793 1.2853 -0.47% +0.00% +1.2859 +1.2743 Australian/Doll AUD= 0.7506 0.7462 +0.59% +0.00% +0.7533 +0.7451

ar

Euro/Swiss EURCHF= 1.1928 1.1914 +0.12% +0.00% +1.1949 +1.1900 Euro/Sterling EURGBP= 0.8808 0.8748 +0.69% +0.00% +0.8837 +0.8729 NZ Dollar/Dolar NZD= 0.6940 0.6984 -0.63% +0.00% +0.6985 +0.6904 Dollar/Norway NOK= 8.0131 8.0742 -0.76% +0.00% +8.0825 +7.9818 Euro/Norway EURNOK= 9.5260 9.5726 -0.49% +0.00% +9.5775 +9.5223 Dollar/Sweden SEK= 8.6692 8.7027 -0.09% +0.00% +8.7118 +8.6136 Euro/Sweden EURSEK= 10.3080 10.3170 -0.09% +0.00% +10.3275 +10.2710

(Additional reporting by Tom Finn in London; editing by Mark Heinrich and Jonathan Oatis)