LONDON, Dec 2 (Reuters) - The euro steadied after data on Tuesday showed euro zone inflation was slightly hotter-than-expected, while the dollar rose against the yen as an auction of Japanese government debt drew solid demand, easing investor nerves after Monday's selloff in global fixed income.
The euro was steady at $1.1608 after data showed inflation in the 20 nations sharing the euro accelerated to 2.2% last month from 2.1% in October, a small rise that is unlikely to be too concerning for the European Central Bank.
Inflation in the euro zone is practically at the ECB's 2% target, ECB policymaker Joachim Nagel said in an interview published on Tuesday.
"This (inflation data) comes at a time where some had claimed we could yet see another cut from the ECB, although the likeliness is that their easing cycle is over," said Joshua Mahony, chief market analyst at Scope Markets.
STRONG DEMAND FOR JAPANESE GOVERNMENT BONDS
The greenback rose 0.3% against the yen to 156.00, after hitting a two-week low on Monday, following a sale of 10-year Japanese government bonds which saw the strongest demand since September.
"The auction result appears to have provided a measure of reassurance to the market," said Shoki Omori, chief desk strategist at Mizuho in Tokyo.
Stocks, bonds, cryptocurrencies and the dollar all tumbled on Monday after Bank of Japan Governor Kazuo Ueda said that the central bank would consider the "pros and cons" of raising interest rates at its next policy meeting, sending Japanese two-year yields above 1% for the first time since 2008 and prompting a spillover into global bond markets.
Adding to the anxiety was weaker-than-expected manufacturing data from the U.S., heaping pressure on the Federal Reserve to cut interest rates this month.
Fed funds futures are pricing an 87% probability of a 25-basis-point cut at the Fed's next meeting on December 10, compared with a 63% chance a month ago, according to the CME Group's FedWatch tool.
The dollar index was steady at 99.49, after touching a more than two-week low on Monday.
Sterling edged 0.1% lower at $1.3196 , having touched its highest level in a month on Monday.
The Bank of England cut the amount of capital it estimates lenders need to hold in a bid to boost lending and stimulate the economy in the first reduction to bank capital requirements since the financial crisis.
Reporting by Joice Alves in London, additional reporting Gregor Stuart Hunter in Singapore; Editing by Sharon Singleton and Alex Richardson
