* Dollar rises above 112 yen for first time since Jan
* Stronger-than-expected U.S. wholesale prices lift dollar
* U.S. consumer inflation data due Thursday eyed for rate-hike clues
By Daniel Leussink
TOKYO, July 12 (Reuters) - The dollar rose to a six-month high against the yen and steadied against other major peers on Thursday after U.S. inflation data reaffirmed expectations that the Federal Reserve will hike interest rates two more times this year.
While financial markets remained vexed by fears of a full-scale Sino-U.S. trade war, investors’ focus was drawn to the slightly stronger-than-expected producer price reading which boosted confidence in the world’s top economy.
The dollar firmed 0.3 percent to 112.29 yen after rising as much as 1.3 percent in U.S. trade on Wednesday, breaching the 112-barrier for the first time since Jan. 10.
The dollar’s index against a basket of six major currencies edged up towards a one-week high of 94.769 reached overnight, trading at 94.753.
Investors were looking U.S. consumer inflation data due at 8:30 a.m. local time (1230 GMT) for further clues on when and how fast the Fed will raise interest rates.
“The consumer inflation reading could be strong as oil prices have been high, which could lead to more support for the dollar,” said Minori Uchida, chief currency strategist at MUFG Bank.
“But oil prices have already started to come down, and I don’t think long-term interest rates will rise that much. That means I don’t think support for the dollar won’t really continue even if the dollar is bought at first,” he said.
The biggest annual increase in 6-1/2 years in June U.S. producer prices, thanks to gains in the cost of services and motor vehicles, set the scene for an upside surprise in the consumer price index numbers.
As the dollar held firm, the euro lacked momentum, trading at $1.1675, edging further off a 3-1/2-week high off $1.17905 touched on Monday.
On Wednesday, nervousness in broader currency markets over an escalation in the U.S.-China trade war was slightly more contained than in equity markets, where there were hefty falls globally after Washington threatened 10 percent tariffs on $200 billion worth of Chinese imports.
“If the U.S. levies tariffs on $200 billion worth of Chinese imports, China can’t levy tariffs on a similar amount, but it is likely there will be some kind of sanctions,” said Kazushige Kaida, head of foreign exchange at State Street Bank.
“If that continues to escalate, not only the U.S. will be hit on a macro-economic level, but China’s macro-economy, and countries with macro-economic ties to China, will be impacted as well.”
The Canadian dollar weakened against the dollar as broad-based gains for the greenback offset an interest rate hike and the prospect of further tightening by the Bank of Canada.
The Canadian dollar was nearly flat in Asia on Thursday at C$1.3210 per U.S. unit, after having fallen about 0.75 percent the previous day.
The Turkish lira hit a record low of 4.9767 lira per dollar earlier on Thursday before bouncing back slightly to 4.8998 per dollar as the currency was roiled by worries about economic management under a new presidential system. (Editing by Shri Navaratnam and Kim Coghill)