* Inflation worries ahead of U.S. CPI data
* European stocks fall, Bund yields at nearly year high.
* Dollar stronger, boosting Japanese export stocks
By Jeremy Gaunt, European Investment Correspondent
LONDON, June 13 (Reuters) - Inflation concerns undermined
European stocks and lifted the dollar on Friday as financial
markets eyed key U.S. consumer price data due later in the day.
Euro zone government bond yields also rose to their highest
in nearly a year.
May's Consumer Price Index (1230 GMT) will be more closely
watched than usual following a series of warnings from U.S.
Federal Reserve officials about inflationary pressures.
The warnings have prompted expectations of rate hikes by the
end of the year. Other central banks, including in the euro
zone, have been similarly hawkish.
Also fixing attention was a Group of 8 finance ministers
meeting in Japan over the weekend, which could underpin some
recent strength in the dollar.
European stocks fell ahead of the U.S. data.
The FTSEurofirst 300 <> index of top European shares
was down 1 percent. It gained 0.9 percent on Thursday, snapping
a six-session losing run.
"Inflation is a major negative factor for equities, no
matter the source, so any good news on either lower oil prices
or (macroeconomic) data would be a tremendous support," said
Arthur van Slooten, strategist at Societe Generale, in Paris.
Oil <Clc1> was down slightly in the day but still above a
heady $136 a barrel.
Earlier, Japan's Nikkei stock average <> rose 0.6
percent, primarily on the back of exporters who would benefit
from a weaker yen if the dollar rises.
Still, the benchmark Nikkei average posted its worst weekly
drop in three months as worries about rising inflation and
interest rate hikes dampened investor appetite.
The Nikkei ended the day up 85.13 points at 13,973.73. For
the week, it lost 3.6 percent.
DOLLAR, BONDS
The dollar rose against the euro and was flat against the
yen and was on track for its best week in over three years
against a basket of currencies.
"If the tone of (the G8) statement is unchanged from the
last meeting when coordinated action was mentioned, this would
give more support to the dollar," said Michael Klawitter,
currency strategist at Dresdner Kleinwort in Frankfurt.
The euro was down 0.25 percent at $1.5409 <EUR=>. The dollar
index -- against major currencies -- was up 0.15 percent at
73.928, up more than 2 percent on the week and heading for its
biggest weekly gain since April 2005 <.DXY>.
The yen was steady at 108.00, but close to a three month
high set the previous session <JPY=>.
Inflation worries continued to hit fixed income. Bund
futures hit their lowest price since July <FGBLc1> and the
10-year euro zone government bond yield was at 4.6350 percent
<EU10YT=RR>, the highest since July.
(Additional reporting by Blaise Robinson)
