* Weak U.S. data keeps pressure on U.S. Treasury yields
* Dollar index wallows near 7-week lows
By Lisa Twaronite
TOKYO, Oct 15 (Reuters) - The dollar wallowed around seven-week lows against a basket of currencies in Asian trading on Thursday, after weak U.S. sales data prompted investors to scale back bets that the U.S. Federal Reserve would hike interest rates by the end of 2015.
The dollar index was last nearly flat from late U.S. levels at 93.970, after tumbling as low as 93.845, its deepest nadir since Aug. 26.
U.S. retail sales barely rose in September, edging up only 0.1 percent and falling short of expectations for a 0.2 percent rise, according to a Reuters poll of economists. Producer prices recorded their biggest decline in eight months.
The data increased demand for the safety of U.S. Treasuries, pressuring yields and further sapping the dollar’s appeal.
The yield on benchmark 10-year Treasury notes was at 1.975 percent in Asian trading, down from its U.S. close of 1.982 percent on Wednesday.
“The weak Sept U.S. retail sales data kicked off a slide in U.S. yields to lows since April, hurting USD across the board,” Sean Callow, senior strategist at Westpac in Sydney, said in a note to clients on Thursday.
“Every G10 currency has risen against USD over the past 24 hours,” he said.
Also on Wednesday, the Fed’s Beige Book showed the U.S. economy grew at a modest pace, keeping alive hopes that the U.S. central bank is on track to eventually raise interest rates for the first time since 2006.
U.S. interest rates futures implied traders see about a 1-in-4 chance the Fed would raise rates by year-end, according to CME Group’s FedWatch program. The U.S. central bank will hold two more policy meetings in 2015, on Oct. 27-28 and Dec. 15-16.
The Fed opted to hold policy steady last month as policymakers fretted that a slowing global economy, particularly China, might threaten the U.S. economic outlook. Figures released on Wednesday showed the pace of China’s consumer inflation growth slowed.
The euro was buying $1.1474 after rising as high as $1.1489 overnight, its highest since Aug. 26.
Against its Japanese counterpart, the dollar fell as low as 118.61 yen, its lowest since Sept. 7, and was last trading at 118.85 yen.
The yen’s gains were restrained by speculation that the Bank of Japan might take further stimulus steps to bolster the flagging economic recovery.
Japanese manufacturers’ confidence worsened for the second straight month and is expected to fade further, a Reuters poll showed, adding to lingering fears of a recession and keeping pressure on policymakers to offer support.
Editing by Kim Coghill