* U.S. 10-year Treasury yield retreats to one-week low
* U.S. September consumer price data weaker than expected
* Euro gains as minutes signal ECB on track to pare stimulus
* Swedish crown jumps on upbeat inflation, home price data
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
(Updates market action, changes dateline, previous LONDON) NEW YORK, Oct 11 (Reuters) - The dollar weakened to a near two-week low on Thursday against a basket of currencies as traders reduced their greenback holdings on lower U.S. Treasury yields and a weaker-than-forecast rise in domestic consumer prices in September. The euro climbed to a one-week peak against the dollar as minutes on the European Central Bank's policy meeting last month suggested policy-makers have not abandoned their plan to end its 2.6 trillion euro bond purchase program this year. Among other major currencies, the Swedish crown jumped following stronger-than-expected inflation and home price data, raising prospects for the Riksbank to increase interest rates in December, analysts said. The Chinese yuan stabilized in offshore trading, rebounding from early weakness due to a global equity rout. Traders brushed off comments from U.S. President Donald Trump signaling he is not backing off an escalating his trade war with Beijing.
"Yields have pulled back and you have softer inflation data. This puts a question on the number of Fed rate hikes in 2019," said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California. The U.S. Labor Department said on Thursday its consumer price index rose 0.1 percent in September, less than the 0.2 percent increase forecast among analysts polled by Reuters.
The CPI miss reduced bets U.S. inflation is accelerating, spurring appetite for U.S. government bonds. This added to the safe-haven bid for Treasuries stemming from a dramatic sell-off in overseas stock markets that followed big losses in the S&P 500 and Dow on Wednesday. An index that tracks the dollar versus six currencies fell to 94.987, the lowest since Sept. 28. At 10:50 a.m. (1450 GMT), the dollar index was down 0.32 percent at 95.205. The benchmark 10-year Treasury yield fell to a one-week low at 3.1686 percent. It reached a seven-year peak at 3.261 percent on Tuesday. Forecasts from Fed officials released last month showed they expected three rate hikes in 2019, while some of them have said they are open to a rate increase in December, which would be the fourth this year. Their counterparts at the ECB seemed on track, based on the latest minutes, to normalize their ultra loose policy later this year despite concerns about slowing growth in Europe.
The common currency was up 0.42 percent at $1.15660 after touching a one-week high. It was 0.43 percent higher at 129.850 yen. The Swedish crown was 1.46 percent higher at 8.9980 per dollar and 1.09 stronger at 10.4099 per euro. Offshore yuan rose 0.4 percent to 6.8960 per dollar, rebounding from an eight-week low set earlier on Thursday.
Currency bid prices at 10:52AM (1452 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change
Euro/Dollar EUR= $1.1564 $1.1518 +0.40% -3.60% +1.1599 +1.1520 Dollar/Yen JPY= 112.2400 112.2700 -0.03% -0.38% +112.5300 +111.9800 Euro/Yen EURJPY= 129.84 129.32 +0.40% -3.95% +130.2000 +129.2200 Dollar/Swiss CHF= 0.9888 0.9899 -0.11% +1.49% +0.9903 +0.9857 Sterling/Dollar GBP= 1.3222 1.3194 +0.21% -2.15% +1.3246 +1.3184 Dollar/Canadian CAD= 1.3045 1.3066 -0.16% +3.74% +1.3068 +1.3025 Australian/Doll AUD= 0.7115 0.7060 +0.78% -8.79% +0.7129 +0.7047
Euro/Swiss EURCHF= 1.1437 1.1404 +0.29% -2.16% +1.1442 +1.1393 Euro/Sterling EURGBP= 0.8745 0.8730 +0.17% -1.55% +0.8764 +0.8729 NZ Dollar/Dolar NZD= 0.6518 0.6447 +1.10% -8.02% +0.6524 +0.6447 Dollar/Norway NOK= 8.2169 8.2348 -0.22% +0.12% +8.2421 +8.1908 Euro/Norway EURNOK= 9.5041 9.4876 +0.17% -3.50% +9.5178 +9.4764 Dollar/Sweden SEK= 9.0008 9.1422 -1.10% +9.74% +9.1422 +8.9663 Euro/Sweden EURSEK= 10.4090 10.5249 -1.10% +5.79% +10.5359 +10.3750
(Additional reporting by Saikat Chatterjee in LONDON Editing by David Stamp and Dan Grebler)