* Upbeat U.S. inflation data, ECB easing prospects prop up dollar
* Dollar steady after rebounding from 7-week lows vs euro, yen
By Shinichi Saoshiro
TOKYO, Oct 16 (Reuters) - The dollar was well supported on Friday after rebounding from 7-week lows thanks to stronger-than-expected U.S. inflation data and after European Central Bank policy maker Ewald Nowotny raised expectations for further euro zone easing.
The dollar index .DXY stood at 94.523 after bouncing from 93.806 touched overnight, its lowest since late August.
Indicators out on Thursday showed a surprise 0.2 percent rise in the September U.S. core consumer price index, boosting the year-on-year gain to 1.9 percent and pushing it closer to the Federal Reserve's 2 percent goal. urn:newsml:reuters.com:*:nL1N12F0U3
The upbeat inflation data gave the dollar some relief, which has been battered by a run of poor U.S. indicators and concerns about China's economy undermining prospects of the Fed hiking rates this year.
"It is doubtful the market tried to factor in the possibility of the Fed raising rates this year on the inflation number, but the Fed is 'data dependent' so it reacts positively to upbeat data," said Shinichiro Kadota, chief Japan forex strategist at Barclays (L:BARC) in Tokyo.
"Nowotny's comments also hurt the euro, so the stage was set for participants to cover shorts in the dollar," he said.
The euro was steady at $1.1376 EUR= , having slid from a 7-week peak of $1.1495 scaled the previous day after ECB's Nowotny said it was "obvious" the central bank must seek more ways to stimulate the euro zone economy. The common currency was on track to end the week effectively flat.
The greenback was nearly unchanged at 118.94 yen JPY= after pulling away from a 7-week trough of 118.065 struck overnight. The U.S. currency was still poised to lose 1 percent this week.
The New Zealand dollar lost a bit of lift after news on Friday of inflation cooling slightly in the third quarter, an outcome seen giving the central bank room to cut rates if needed.
The consumer price index rose 0.3 percent in the third quarter, taking the annual rate to 0.4 percent, Statistics New Zealand said on Friday. urn:newsml:reuters.com:*:nL3N12F6FF
The kiwi inched down 0.3 percent to $0.6829 NZD=D4 after flying to a 3-month high of $0.6897 earlier this week on expectations that the Reserve Bank of New Zealand might pause in cutting rates.